ECONOMICS
TECHNOLOGY
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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trade surplus in US
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trade deficit in Canada
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trade deficit in both
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trade surplus in Canada
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Detailed explanation-1: -Answer and Explanation: Appreciation in the dollar means that the dollars become expensive relative to other currencies. It implies that it will be expensive for people to purchase goods in dollars. Then, the foreigners would demand fewer goods from the U.S, and the country’s exports would decline.
Detailed explanation-2: -When the dollar appreciates relative to the Canadian dollar: U.S. goods become more expensive in Canada. When the U.S. dollar price of a foreign currency rises: it becomes cheaper for foreigners to buy U.S. goods.
Detailed explanation-3: -If the dollar appreciates (the exchange rate increases), the relative price of domestic goods and services increases while the relative price of foreign goods and services falls.
Detailed explanation-4: -The stronger U.S. dollar also makes imports cheaper, which contributes to lowering consumer price inflation both by lowering the cost of imported final goods and by lowering costs for imported intermediate goods (assuming producers pass on those cost savings to consumers).