What would a depreciation of the Canadian real exchange rate induce Canadian consumers to buy?
A) fewer domestic goods and foreign goods
B) more domestic goods, but fewer foreign goods
C) fewer domestic goods, but more foreign goods
D) more domestic goods and foreign goods

Question

Quizplus · Accepted Answer

A depreciation of the Canadian real exchange rate makes foreign goods more expensive relative to domestic goods, leading Canadian consumers to buy more domestic goods and fewer foreign goods.

What Would a Depreciation of the Canadian Real Exchange Rate