Suppose that, initially, the foreign exchange market between the United States and Canada is in equilibrium. Suppose that incomes increase in the United States, causing U.S. consumers to purchase more goods and services made in Canada.

Illustrate how this change affects the market for Canadian dollars by shifting one or both of the curves on the following graph.

Note: Select and drag one or both of the curves to the desired position. Curves will snap into position, so if you try to move a curve and it snaps back to its original position, just drag it a little farther.

Supply Demand Supply U.S. DOLLARS PER CANADIAN DOLLAR Demand CANADIAN DOLLARS