If Canadian budget deficits (which require the borrowing of funds)raise interest rates and attract investment funds from abroad,what will the impact be on the foreign exchange value of the dollar and Canadian net exports?

Question

Quizplus · Accepted Answer

Higher interest rates attract foreign investment, increasing demand for the Canadian dollar, causing it to appreciate. An appreciated dollar makes Canadian goods more expensive abroad, reducing net exports.

If Canadian Budget Deficits (Which Require the Borrowing of Funds)raise