Suppose the exchange rate between Canadian dollars and U.S.dollars is $0.60 U.S.dollars per Canadian dollar.If the exchange rate goes to $0.50 U.S.dollars per Canadian dollar,what will happen to the exports of American goods into Canada?

Question

Quizplus · Accepted Answer

The correct answer is A.When the exchange rate goes from $0.60 U.S. dollars per Canadian dollar to $0.50 U.S. dollars per Canadian dollar, it means that the Canadian dollar has appreciated against the U.S. dollar. This makes American goods more expensive for Canadians, so exports of American goods into Canada will tend to fall.

Suppose the Exchange Rate Between Canadian Dollars and U