What is the most likely effect of an appreciation of the Canadian real exchange rate on the quantity of Alberta beef demanded by French citizens?
A) French citizens will buy less of Alberta beef.
B) French citizens will buy more of Alberta beef.
C) The quantity of Alberta beef demanded by French citizens will not change because the nominal exchange rate has not changed.
D) The quantity of Alberta beef demanded by French citizens will not change because it is the French real interest rate that matters for French citizens.

Question

Quizplus · Accepted Answer

An appreciation in the Canadian real exchange rate would make Alberta beef more expensive for French citizens, as it would require more euros to purchase the same amount of Canadian dollars to buy the beef. This would likely lead to a decrease in the quantity of Alberta beef demanded by French citizens.

What Is the Most Likely Effect of an Appreciation of the Canadian