A Lower Inflation Rate in Canada Relative to Other Countries

Multiple Choice

A lower inflation rate in Canada relative to other countries causes the Canadian dollar to appreciate because

A) Canadian real interest rates fall.
B) prices of Canadian resources fall in international markets.
C) speculators anticipate depreciation of the Canadian dollar.
D) Canadian products and services are relatively cheaper so exports to R.O.W. increase.
E) Canadian products and services are relatively cheaper so imports from R.O.W. increase.