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Analyze the following and discuss your answers: (a) Assume the price of a shirt in Florida is USD20 and in Ottawa is CAD25. The exchange rate...
1. Analyze the following and discuss your answers: (a) Assume the price of a shirt in Florida is USD20 and in Ottawa is CAD25. The exchange rate between USD and CAD is .80. Calculate the effects of an appreciation and depreciation in the exchange rate on the price of the shirt in US and Canada; and the likely effects on the demand in both countries. Please show all work. (b) for a company sourcing key inputs in a foreign country, describe the effects of an appreciation and a depreciation in the exchange rate on its input prices and the likely effects on the company’s cost of production
