The export effect suggests that when the exchange rate falls, demand for Canadian exports increases.

Question

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The export effect is a commonly observed phenomenon in economics, whereby a lower exchange rate can increase the demand for a country's exports. This is because a lower exchange rate makes exports cheaper for foreign buyers and can make imports more expensive for Canadian consumers. As a result, Canadian producers may see an increase in demand for their goods, potentially leading to increased production and economic growth.

The Export Effect Suggests That When the Exchange Rate Falls