Question

On July 1, the exchange rate between the Canadian dollar CAD and the US dollar USD is 1 CAD for .80 USD. On August 1, the exchange rate is 1 CAD for 1 USD. Over this period of time, we would say that ___________.

Answer 1

Canadian Dollar has appreciated whereas US Dollar has depreciated.

Step-by-step explanation:

The July 1 exchange rate,

1 USD = 0.80 CAN $

This means to buy 1 USD, we need 0.80 CAN $. This further means, USD is stronger currency and CAN $ IS weaker.

On Aug 1, the exchange rate is 1 USD = 1 CAN$

This means, now to buy 1 CAN $, one is required to pay 1 USD i.e more USDs than before. This means over the period of one month, the CAN $ has appreciated whereas US Dollar has depreciated over the period.