Assume that the inflation rate becomes much higher in the United States relative to Canada. This will place pressure on the value of the Canadian dollar when holding other factors constant. Also, assume that Canadian interest rates begin to rise relative to U.S. interest rates. The change in interest rates will place pressure on the value of the Canadian dollar, when holding other factors constant.

Question

03-02-2020
Business

contestada

Assume that the inflation rate becomes much higher in the United States relative to Canada. This will place pressure on the value of the Canadian dollar when holding other factors constant. Also, assume that Canadian interest rates begin to rise relative to U.S. interest rates. The change in interest rates will place pressure on the value of the Canadian dollar, when holding other factors constant.

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zuwairahdahir zuwairahdahir · Answer 1 · 2020-02-05T15:36:02+01:00

Answer:

Assume that the inflation rate becomes much higher in the United States relative to Canada. This will place _upward_ pressure on the value of the Canadian dollar when holding other factors constant. Also, assume that Canadian interest rates begin to rise relative to U.S. interest rates. The change in interest rates will place _upward__ pressure on the value of the Canadian dollar, when holding other factors constant.

Explanation:

The pace of increasing products and service costs in a nation is inflation. Inflation can arise when cost of production like raw materials and salaries spike in prices. Inflation can occur as the customer is prepared to pay more for the product as demand for that products and services rises. The higher the inflation the higher the pressure placed.