Suppose the exchange rate between British pounds and Canadian dollars is originally $2.50 per pound.If it then changes to $3 for 1 pound,what will happen to the imports of British goods into Canada?

Question

Quizplus · Accepted Answer

As the Canadian dollar becomes stronger relative to the pound, it will take more Canadian dollars to purchase the same amount of British pounds. This means that British goods will become more expensive for Canadian consumers, which will likely lead to a decrease in demand for those goods and therefore a decrease in imports.

Suppose the Exchange Rate Between British Pounds and Canadian Dollars