If Canadian interest rates rise, the exchange rate value of the dollar ________ and net exports ________.
A)rises; increase
B)rises; decrease
C)falls; increase
D)falls; decrease
E)rises only if the U.S. interest rates fall concurrently; decrease

Question

Quizplus · Accepted Answer

If Canadian interest rates rise, it would lead to a rise in the value of the Canadian dollar, making Canadian exports relatively more expensive and less attractive to foreign buyers, which would decrease net exports.

If Canadian Interest Rates Rise, the Exchange Rate Value of the Dollar