FIGURE 34-3
-Refer to Figure 34-3.An increase in demand or decrease in the supply of foreign exchange will

Question

Quizplus · Accepted Answer

If there is an increase in demand or decrease in the supply of foreign exchange, it means there will be less Canadian dollars to exchange for foreign currency. This will lead to a decrease in the supply of Canadian dollars, causing the value of the Canadian dollar to depreciate. As a result, Europeans will be able to buy more Canadian goods for less money, while Canadians will find European goods relatively more expensive.

FIGURE 34-3 -Refer to Figure 34-3.An Increase in Demand or Decrease in Decrease