A rise in the value of the Canadian dollar is an appreciation that:
A) increases the exchange rate defined as the Canadian dollar price of the US dollar.
B) indicates a fixed exchange rate regime.
C) lowers the exchange rate defined as the Canadian dollar price of the US dollar.
D) has no effect on nominal or real exchange rates.

Question

Quizplus · Accepted Answer

An appreciation of the Canadian dollar means it gains value relative to other currencies. This lowers the exchange rate defined as the Canadian dollar price of the US dollar, because fewer Canadian dollars are needed to buy one US dollar.

A Rise in the Value of the Canadian Dollar Is