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Assume that the economy of Canada is fully employed. What is the correctly labeled graph of the foreign exchange market for the U.
Assume that the economy of Canada is fully employed.
What is the correctly labeled graph of the foreign exchange market for the U.S. dollar to show the impact of an increase in the real interest rate of the United States relative to the real interest rate of Canada on the Demand for the U.S. dollar and the value of the U.S. dollar relative to the Canadian dollar.
b) Assume that Canada is operating with a balance in merchandise trade, no trade deficit and no trade surplus. What effect will the change in the value of the U.S. dollar in
part (d) above have on the trade balance of Canada?
