Question

57) If the Canadian dollar price of United States dollars increases from $.80 to $1.00, it can be concluded that: A) the Canadian dollar has depreciated in value relative to the United States dollar. B) both countries are on the international gold standard. C) the American dollar has depreciated in value relative to the Canadian dollar. D) the Canadian dollar has appreciated in value to the United States dollar. Answer: A EXPLAIN WHY !!!!!!!!!

Answer 1

ANSWER:

Earlier the canadian dollar had a rate of 0.80 cents per american dollar , which meant that that things you could buy from 1 american dollar , you could buy the ssame things for $0.80 cents which meant that canadian dollar was more valuable while when the value of both american dollar and canadian dollar is same , therefore to buy the same things , you will have to spend 20 cents more of canadian dollar and therefore the value of canadian dollar has degraded (depreciated) in terms of us dollar as for 1 american dollar you buy the same amount of things as earlier but for buying the samr things one has to pay 20 cents more.