When the value of the Canadian dollar drops
A) both our imports and our exports become more expensive.
B) our imports become cheaper and our exports become more expensive.
C) our imports become more expensive and our exports become cheaper.
D) both our imports and our exports become cheaper.
E) there is no change in the price of our imports and our exports.

Question

Quizplus · Accepted Answer

When the value of the Canadian dollar drops, it means that it has depreciated compared to other currencies, such as the US dollar. This makes imports more expensive because it takes more Canadian dollars to buy the same amount of foreign currency needed to purchase the imports. On the other hand, exports become cheaper for foreign buyers because they can purchase more Canadian goods for less of their own currency.

When the Value of the Canadian Dollar Drops