Question

Imagine that the value of the US dollar rises compared to the Canadian dollar for many months. What effect is this likely to have on the amount of goods the US imports from Canada?

Answer 1

The effect this is likely to have on the amount of goods the US imports from Canada is: US exports to Canada will be DECREASED.

Hope this helps!

Answer 2

Increases

Step-by-step explanation:

Suppose that the current exchange rate between Canada and united states equals:

1 Canadian Dollar = 0.76 United states dollar

If the value of the US dollar increases as compared to the Canadian dollar for months. Suppose now the exchange rate equals:

1 Canadian Dollar = 0.60 United states dollar

This means that there is an appreciation in the currency of US dollar and depreciation in the currency of Canadian dollar.

Hence, if US imports some goods from the Canada then the amount paid for that amount of goods is lower under this exchange rate than the amount paid for the same amount of goods before this exchange rate.

Therefore, there is an increase in the amount of imports of goods and services from the Canada.