A)When the Canadian dollar depreciates, what happens to exports and imports in Canada? B) If Canadian auto companies make a breakthrough in automobile technology and are able to produce a car that gets 100 kilometers to the litre, what will happen to the Canadian dollar exchange rate?

Ans: Effect of depreciation on export and import.
? If dollar depreciated it increases export and a decrease import .the factors which effect such as global and increases Competition from emerging economies.

? Depreciation of the currency gives more earnings and encourages foreign currency in international trade market.

? It encourages government in reducing the trade deficit in the economy.

? The cost of domestic goods reduces.

?The price of foreign goods increases.

B.) If Canadian auto companies make a breakthrough in automobile and if they produce 100 kilometres to the litre .it results good for the economy.
? The dollars will appreciate.
? It increases productivity and increases future exchange rate.
? It provides employment opportunities.
? Due to increase in productivity demand curve move to rightward and it leads to reach equilibrium in exchange rate.