Suppose the Bank of Canada Raises Its Target for the Overnight

Multiple Choice

Suppose the Bank of Canada raises its target for the overnight interest rate from 3% to 3.25%,while interest rates in other countries do not change.How will this policy action affect Canada's imports and exports?

A) The Canadian dollar will appreciate and encourage imports into Canada.
B) The Canadian dollar will appreciate and encourage Canada's exports.
C) The Canadian dollar will depreciate and discourage Canada's exports.
D) The Canadian dollar will depreciate and encourage imports into Canada.
E) The Canadian dollar will appreciate and discourage imports into Canada.