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The foreign exchange market for the U.S. dollar in Canada is initially in equilibrium, as shown by point E0 in the accompanying graph. Market for U.S. dollars Now suppose that the US. demand for Canadian wine increases. 1.) Use the three-point curve drawing tool to draw and label the effect of this event on the exchange rate. 2.) Use the paint drawing tool to plot and label the new equilibrium point. Carefully follow the instmctians above, and only draw the required objects. It is seen from this example that an increase in the demand for Canadian exports leads to V' of the Canadian dollar. a depreciation . . Do an apprecratron l Exchange Rate (Canadian dollar/'UE. dollar) Units of Foreign Currency (US, Dollars)