If the Canadian dollar becomes stronger in international markets,consequences include
A)a decrease in net exports,a decrease in equilibrium real GDP,and a decrease in the price level.
B)an increase in net exports,an increase in equilibrium real GDP,and an increase in the price level.
C)an increase in equilibrium real GDP,an increase in the price level,and no change in net exports.
D)a decrease in the price level but an increase in equilibrium real GDP and net exports.

Question

Quizplus · Accepted Answer

A stronger Canadian dollar means Canadian exports become more expensive for foreign buyers, leading to a decline in net exports. With a decrease in net exports, the aggregate demand in the economy will decrease, leading to a decrease in equilibrium real GDP. Additionally, the decrease in aggregate demand will put downward pressure on prices, leading to a decrease in the price level.

If the Canadian Dollar Becomes Stronger in International Markets,consequences Include