Question: Please help answer this thanks!!! Initially, the real interest rates in the United States and Canada are equal to 6 percent. The real interest rate

Please help answer this thanks!!! Initially, the real interest rates in

Please help answer this thanks!!!

Initially, the real interest rates in the United States and Canada are equal to 6 percent. The real interest rate in the United States increases to 7 percent while the real interest rate in Canada decreases to 5 percent. (a) How and why will capital flows be affected by this change in real interest rates? (b) Using a correctly labeled graph for the Canadian dollar market, show and explain how the value of the Canadian dollar will change relative to the value of the US dollar. (c) Explain how the value of the Canadian dollar will affect each of the following in the United States: (i) Imports from Canada (ii) Exports to Canada

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