Explanation:
The exchange rate moved from 1.40 to 1.53 EURCAD, meaning EUR appreciated against CAD. We need the EXCEPT answer (one that does NOT explain this).
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Q-1 (22.17.1): Three months ago, the spot foreign exchange rate between the euro and the Canadian dollar was $1.40 EURCAD. Today it is markedly higher at $1.53 EURCAD. Each of the following developments, ceteris paribus, might reasonably explain this increase EXCEPT which is unlikely to be the explanation?
A
The inflation rate in the Eurozone suddenly increased but was unchanged in Canada
B
The money supply suddenly increased in Canada, but the money supply in the Eurozone is unchanged
C
Exports from the Eurozone to Canada (i.e., the imports to Canada from the Eurozone) suddenly increased
D
The risk-free interest rate in the Eurozone suddenly decreased, while the Canadian risk-free interest rate is unchanged
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