Income effects on exchange rates

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Income Effects on Exchange Rates. Assume that the U.S. income level rises at a much higher rate than does the Canadian income level. Other things being equal, how should this affect the (a) U.S. demand for Canadian dollars, (b) supply of Canadian dollars for sale, and (c) equilibrium value of the Canadian dollar?

Increase, increase, may not be affected

Increase, may not be affected, increase

May not be affected, increase, increase

Increase, may not be affected, decrease

Reference no: EM13885369

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