Exchange Rate (Canadian-dollar price of one euro) Exchange Rate (Canadian dollar price of one curd) Quantity of foreign currency (euros) Quantity of foreign currency (euros) (1) Demand Shifts ) Supply Shifts FIGURE 13 50) Refer to Figure 13. An increase in demand or decrease in the supply of foreign exchange will Al have no effect on the exchange rate. B] encourage Canadians to buy more European goods C cause the Canadian dollar to depreciate. Di cause the Canadian dollar to appreciate. 517 B