If Canada has full employment and the dollar dramatically depreciates in value, we can expect:
A)both our imports and our exports to rise.
B)both our imports and our exports to fall.
C)our exports to fall and our imports to increase.
D)inflation to occur.

Question

Quizplus · Accepted Answer

When the Canadian dollar depreciates, imported goods become more expensive, leading to higher overall price levels, which can cause inflation.

If Canada Has Full Employment and the Dollar Dramatically Depreciates