Fill in the blanks. Only the blanks. Let\'s suppose U.S. inflation is 7% and Can

Question

Fill in the blanks. Only the blanks. Let's suppose U.S. inflation is 7% and Canada's inflation is 3%. Further assume the U.S. dollar depreciates nominally about 4% relative to the CAD (meaning the CAD appreciates nominally approximately % versus the USD The U.S. is not necessarily going to import more from Canada just because Canada's inflation is lower than the U.S.'s. Inflation is only one part of a two-part story. Why don't U.S. consumers take advantage of the lower Canadian inflation? Because the US. importer finds that buying CAD at a higher price and then paying % higher prices for the goods than they did a year ago results in, effectively, a % increase in the cost of buying Canadian goods. That's the price increase the US. buyer sees at home! importing from Canada is no less attractive (but no more either) than it used to be.

Explanation / Answer

4%.its opposite and equal in effect

4% higher price and paying 3%, 7% increase in cost

7%

All answers are self explanatory

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