If the Canadian real exchange rate appreciates, which of the following most likely happen?
A)Exports increase and imports decrease.
B)Exports decrease and imports increase.
C)Exports and imports both increase.
D)Exports and imports both decrease.

Question

Quizplus · Accepted Answer

When the Canadian real exchange rate appreciates, Canadian goods become more expensive for foreign buyers, leading to a decrease in exports. Conversely, foreign goods become cheaper for Canadian buyers, leading to an increase in imports.

If the Canadian Real Exchange Rate Appreciates, Which of the Following