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Homework answers / question archive / 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?
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.
