Which of the following is the most likely effect of an appreciation of the Canadian real exchange rate on the quantity of Alberta beef demanded by French citizens?
A)French citizens will buy less of Alberta beef.
B)French citizens will buy more of Alberta beef.
C)The quantity of Alberta beef demanded by French citizens will not change because the nominal exchange rate has not changed.
D)The quantity of Alberta beef demanded by French citizens will not change because it is the French real interest rate that matters for French citizens.

Question

Quizplus · Accepted Answer

An appreciation of the Canadian real exchange rate means that Canadian goods, including Alberta beef, become relatively more expensive for foreign buyers. Therefore, it is likely that French citizens will buy less of Alberta beef.

Which of the Following Is the Most Likely Effect of an Appreciation