Suppose the exchange rate between Canadian dollars and U.S. dollars is 0.60 U.S. dollars per Canadian dollar. If the exchange rate decreases to 0.50 U.S. dollars per Canadian dollar, it would result in:

Question

Quizplus · Accepted Answer

When the exchange rate decreases from 0.60 U.S. dollars per Canadian dollar to 0.50 U.S. dollars per Canadian dollar, it means that each U.S. dollar can now buy more Canadian dollars. This makes Canadian goods comparatively cheaper for U.S. consumers. As a result, U.S. consumers are likely to buy more Canadian goods, leading to an increase in the quantity of Canadian dollars demanded by U.S. consumers.

Suppose the Exchange Rate Between Canadian Dollars and U