Homework Answers
5. The Canadian dollar will depreciate against the US dollar. As the income level decreased in Canada more Canadian dollars will be exchange against the same amount of dollars.
So, if the exchange rate was,
$1.5678 / Canadian dollars , the rate now will be $1.3200 / Canadian dollars .
So, exchanging Canadian dollars against US dollars , we now get fewer US dollars upon conversion, due to the fall in the income level of the Canadians.
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Several factors affect the exchange rate of a currency with another currency. Which of the following statements are true about the factors that have an impact on exchange rates? Check all that apply. When a government limits imports and restricts foreign exchange transactions, its currency's value tends to increase relative to other currencies. An increase in inflation tends to increase the currency's value with respect to other currencies with lower inflation. If a government intends to prevent its currency's value...
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