The lower the exchange rate, the
A)larger is the quantity of Canadian dollars supplied in the foreign exchange market.
B)larger is the quantity of Canadian dollars demanded in the foreign exchange market.
C)smaller is the quantity of Canadian dollars supplied in the foreign exchange market.
D)smaller is the quantity of Canadian dollars demanded in the foreign exchange market.
E)Both B and C are correct.

Question

Quizplus · Accepted Answer

A lower exchange rate makes Canadian goods and services cheaper for foreign buyers, increasing the demand for Canadian dollars. Simultaneously, it discourages Canadians from exchanging their dollars for foreign currency, reducing the supply of Canadian dollars.

The Lower the Exchange Rate, the