What would be the impact on aggregate demand (AD)if the Canadian dollar depreciated?
A)AD would decrease.
B)AD would increase.
C)AD could either increase or decrease.
D)AD would be unaffected.

Question

Quizplus · Accepted Answer

Depreciation of the Canadian dollar will make exports comparatively cheaper for foreign buyers, which in turn will increase exports of Canadian goods, leading to an increase in aggregate demand. This happens because Canadian goods become more competitive in foreign markets, thereby boosting demand for Canadian exports. Thus, AD would increase.

What Would Be the Impact on Aggregate Demand (AD)if the Canadian