1. A Canadian wheat farmer wants to buy a
tractor in the United States. The tractor costs $100,000. In the fall of 2005,
the CAD/USD (Canadian dollars to U.S. dollars) exchange rate was 1.2. In the
spring of 2006, the exchange rate was 1.15. In which year would the farmer pay
the least amount of Canadian dollars to buy the tractor?
The fall of 2005, because the Canadian dollar is worth 1.2 U.S. dollars,
as opposed to the same dollar being worth 1.15 U.S. dollars. When it's
worth more dollars, that's the less Canadian dollars required to buy the