When Canadian real GDP increases, the growth effect alone causes the Canadian dollar to depreciate.

Question

Quizplus · Accepted Answer

When Canadian real GDP increases, it can lead to an increase in demand for Canadian goods and services, which can strengthen the Canadian dollar. However, other factors such as changes in interest rates or global economic conditions can also affect the value of the Canadian dollar. Therefore, it is not accurate to say that the growth effect alone always causes the Canadian dollar to depreciate.

When Canadian Real GDP Increases, the Growth Effect Alone Causes