If the rate of inflation in Canada falls relative to the rate of inflation in foreign nations,what will happen to the amount of Canadian net exports and subsequently the exchange rate for the Canadian dollar?

Question

Quizplus · Accepted Answer

When Canada's inflation rate falls relative to other countries, Canadian goods become relatively cheaper, increasing demand for exports. This increases net exports and raises the value of the Canadian dollar.

If the Rate of Inflation in Canada Falls Relative to the Rate