Suppose that the exchange rate between Canadian dollars and U.S. dollars is $0.60 U.S. dollars per Canadian dollar. If the exchange rate goes to $0.50 U.S. dollars per Canadian dollar, it would tend to:

Question

Quizplus · Accepted Answer

When the value of the Canadian dollar decreases relative to the U.S. dollar (from $0.60 to $0.50), U.S. goods become more expensive for Canadians, likely decreasing U.S. exports to Canada. Conversely, Canadian goods become cheaper for Americans, likely increasing Canadian exports to the U.S.

Suppose That the Exchange Rate Between Canadian Dollars and U