Suppose Canadian consumers start buying more shoes made in Britain and fewer shoes made in Canada.What effect will this trend have on the foreign exchange market?

Question

Quizplus · Accepted Answer

If Canadian consumers start buying more shoes made in Britain and fewer shoes made in Canada, this means more Canadian dollars will be used to purchase British pounds to pay for the imports. Therefore, Canadian demand for foreign exchange, and for British pounds in particular, will increase.

Suppose Canadian Consumers Start Buying More Shoes Made in Britain