The output or GDP of Canada has increased from 1995 to 1999. This means that more people became employed or productivity has risen. With the GDP on the rise, Canada is able to buy more because people will have more money from work. This would appreciate the dollar because Canadians need the U.S. dollar to purchase our goods.
Demand, on the other hand, has somewhat stayed the same. There were periods when it was up and periods when it was down. When the demand for passenger cars was falling, Canadians were looking elsewhere to buy their cars. This factor would, most likely appreciate the dollar because, one again, the Canadians would need the U.S. dollar to buy our cars. When the demand was up, the opposite situation would happen.
The unemployment rate for Canada fell, possible because of increased advertisement. When the unemployment of a country is low, output and productivity are raising. I stated before, as output rises, imports will also rise. This is due to the ...