Suppose Canadian Demand for Foreign Exchange Increases

question 14

Multiple Choice

Suppose Canadian demand for foreign exchange increases.How will the foreign exchange market be affected?  

• A) The price of foreign exchange will increase, thus depreciating the Canadian dollar, which will make foreign goods cheaper to Canadian residents. 
• B) The price of foreign exchange will increase, thus depreciating the Canadian dollar, which will make foreign goods more expensive to Canadian residents. 
• C) The price of the Canadian dollar will decrease, thus appreciating the Canadian dollar. 
• D) The price of foreign exchange will increase, thus appreciating the Canadian dollar.

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