Please advise if my answers are correct. I think I am weak in part d.
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)
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.© BrainMass Inc. brainmass.com October 25, 2018, 2:47 am ad1c9bdddf
I agree with all of your answers for a,b and c.
a. Correct. Goods from overseas is now cheaper to import ...
Assume the price of a shirt in Florida is USD20 and in Ottawa is CAD25.
Here is the assignment - Assistance with one or both parts of the assignment is helpful...
Exercise: Analyze the following and discussion 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 a 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
Exercise: Using illustrative data show effects of hedged versus non-hedged exchange rate changes on a company's profitability.