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Effects of the appreciation of the Canadian dollar against the US dollars

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Please advise if my answers are correct. I think I am weak in part d.

Question

In 2003 to 2004, the Canadian dollar appreciated against the US dollar. Explain the effects of this appreciation on

a. Canadian importers of goods from the US. (2 marks)
b. Canadian firms that sell commodities to US buyers. (2 marks)
c. American tourists who come to Canada. (2 marks)
d. US investors who had purchased Canadian securities prior to this
currency appreciation. (2 marks)

Answer

a. Importation of goods from the US to Canada will become cheaper and thus increasing imports into Canada.

b. Sales for the Canadian firms will reduce because it would become expensive for US buyers to purchase goods and US will now import less.

c. Since the US dollar is less than the Canadian dollar, Canadian goods and services will be more expensive, therefore American tourists who come to Canada will now pay more for Canadian goods and services.

d. Investors securities will now value less.

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Solution Preview

Hi,
I agree with all of your answers for a,b and c.
a. Correct. Goods from overseas is now cheaper to import ...

$2.19
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Exercise: Analyze the following and discussion your answers:
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