What Would an Appreciation of the Canadian Real Exchange Rate

question 115

Multiple Choice

What would an appreciation of the Canadian real exchange rate induce Canadian consumers to buy?

• A) fewer domestic goods and foreign goods
• B) more domestic goods, but fewer foreign goods
• C) fewer domestic goods, but more foreign goods
• D) more domestic goods and foreign goods

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Definitions:

Common Currency

A currency that is used by multiple countries, facilitating international trade and economic stability, like the Euro in the European Union.

Cross-Border Trade

The buying and selling of goods and services between businesses in neighboring countries or regions.

North American Free Trade Agreement (NAFTA)

A trade agreement between Canada, Mexico, and the United States to reduce trade barriers and increase economic collaboration, replaced by USMCA in 2020.

U.S. and Canada

Refers to the two neighboring countries located in North America, known for their close economic, cultural, and political ties.