What is happening to canada and us exchange rate


Suppose Canada and the U.S. are in equilibrium with a flexible exchange rate and a risk premium of 1%. (Canada is riskier). The real rates of growth in Canada and in the U.S are both 3%, but the U.S. interest is 7% and the Canadian interest rate is 10%. What is happening to the Canada/U.S. exchange rate?

Request for Solution File

Ask an Expert for Answer!!
Microeconomics: What is happening to canada and us exchange rate
Reference No:- TGS068223

Expected delivery within 24 Hours