What would an appreciation 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

An appreciation of the Canadian real exchange rate means that the Canadian dollar is stronger compared to other currencies. This makes foreign goods cheaper for Canadians to buy, and domestic goods relatively more expensive. Therefore, consumers are likely to buy fewer domestic goods but more foreign goods in this scenario.

What Would an Appreciation of the Canadian Real Exchange Rate