The following table indicates the dollar price of libras,the currency used in the hypothetical nation of Libra.Assume that a system of flexible exchange rates is in place.

-Refer to the above table.Suppose that Libra decided to import more Canadian products.We would expect the quantity of libras:
A) demanded at each dollar price to rise and the dollar to depreciate relative to the libra.
B) demanded at each dollar price to fall and the dollar to appreciate relative to the libra.
C) supplied at each dollar price to rise and the dollar to appreciate relative to the libra.
D) supplied at each dollar price to fall and the dollar to depreciate relative to the libra.

Question

The following table indicates the dollar price of libras,the currency used in the hypothetical nation of Libra.Assume that a system of flexible exchange rates is in place.
 
-Refer to the above table.Suppose that Libra decided to import more Canadian products.We would expect the quantity of libras:
A) demanded at each dollar price to rise and the dollar to depreciate relative to the libra. 
B) demanded at each dollar price to fall and the dollar to appreciate relative to the libra. 
C) supplied at each dollar price to rise and the dollar to appreciate relative to the libra. 
D) supplied at each dollar price to fall and the dollar to depreciate relative to the libra.

Quizplus · Accepted Answer

When Libra imports more Canadian products, it needs more Canadian dollars, increasing the supply of libras in the foreign exchange market, leading to an appreciation of the Canadian dollar relative to the libra.

The Following Table Indicates the Dollar Price of Libras,the Currency