Reference no: EM131886747

Problem

The Canadian Dollar VS. the American Dollar is 1.78=1.00. The United States is responsible for over 76 % of Canada's exports. Thus meaning that Canada does a lot of Trade with the US Dollar. The United States has an advantage when it comes to exporting Canada being that the US Dollar goes further in Canada. This meaning that the US can spend less money on exporting the amount of product and still make more money. Canada and the United States Trade often thus making the exchange rate important to both countries Canada's biggest market for trade is the use of its natural resourses, Including oil and mining. Any noted rise in the value of currency will imports to rise and exports to fall. Both countries will still have money invested in each product which they will still want regardless of what happens to the exchange rate. When the price of the good increase on the shelf, sales will drop affecting the amount of product demanded.