If foreign countries are increasing their demand for Canadian financial assets,then we can expect the Canadian dollar to _____ and the current account balance to _____,all other things being equal.

Question

Quizplus · Accepted Answer

When foreign countries increase their demand for Canadian financial assets, they need to purchase Canadian dollars, leading to an appreciation of the currency. An appreciated currency makes Canadian exports more expensive and imports cheaper, which can lead to a decrease in the current account balance.

If Foreign Countries Are Increasing Their Demand for Canadian Financial