Holding all else constant,a decrease in U.S.real GDP will _________ the demand for Canadian dollars in the foreign exchange market and _________ the equilibrium U.S.dollar-Canadian dollar exchange rate.

Question

Quizplus · Accepted Answer

A decrease in U.S. real GDP would likely lead to a decrease in demand for Canadian goods and services, thus decreasing the demand for Canadian dollars. This would lead to a decrease in the equilibrium exchange rate of the U.S. dollar to the Canadian dollar.

Holding All Else Constant,a Decrease in U