When Canadian GDP increases, the growth effect usually dominates the import effect on the value of the Canadian dollar.

Question

Quizplus · Accepted Answer

When Canadian GDP increases, it signifies a stronger economy which can lead to greater demand for the Canadian dollar by international investors, thereby increasing its value. While economic growth can also lead to an increase in imports, the impact on the value of the Canadian dollar from the growth effect is usually stronger.

When Canadian GDP Increases, the Growth Effect Usually Dominates the Import