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Which of the following would cause the US dollar to appreciate as compared to the euro A. Higher price level in Canada relative to the

Which of the following would cause the US dollar to appreciate as compared to the euro

A. Higher price level in Canada relative to the United States.

B. Higher interest rates in the United States relative to Canada.

C. Lower interest rates in the United States relative to Canada.

D. Decreasing GDP in the United States than in Canada.

E. Increasing GDP in Canada relative to the United States.

Coursehero expert answers E. Increasing GDP in Canada relative to United States. However, if GDP is increasing Canada, Canadians will buy more imported goods from US and hence drive demand for dollars, making dollar appreciate. Shouldn't the answer be C. Lower interest rates in US vs. Canada, as this will make investors invest on Canada instead of US due to higher interest rates, thereby depreciating US dollar?

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