CHAPTER 6

Link to article

Summary

This article talks about the Canadian dollar is rising, and how it affects Canada and America. An advantage to the increasing rate of the Canadian dollar is that Canadian shoppers that want to head down to the states to purchase clothes and other items will be able to buy more. A disadvantage is that Canadian goods would become more expensive on the world market, causing our largest trading partner, the U.S., to buy less. The article also says the loonie's last surge was in 2007, which was caused by increasing oil prices and other commodities, which caused Canadian manufacturers and export industry to lose money. This time, the loonie is rising because the world market is losing faith in the U.S. dollar, which is considered a "safe reserve".

Connection

Chapter 6 in the textbook talks about what can be done with excess cash on hand, and there is a paragraph about how changes in purchasing power, which is currency in this case, can affect a company's cash. As stated before, the increase in the Canadian dollar would cause U.S. to buy less from Canada and maybe purchase the same product for a cheaper price from another country. In my opinion, Canada should raise their prices a bit, but not too much so that U.S. would continue to purchase our products.

Reflection

Canada's rising dollar doesn't affect me that much in the short run, but may influence me more later on. As of now, the only direct affect it has on me is the rising gas prices. On the other hand, I could go down south to the states and purchase more things than before with the same amount of money. In my opinion, keeping the prices the same and having more people purchasing your product is better than increasing prices and having less people buying your product. If gas prices were lower, I would drive my car more often. Now that the gas prices range from $1.10/L - $1.15/L, I try not to drive as much. Gas is quite expensive; I could probably use up to $60 every two weeks if I drove everyday, and that could really hurt my wallet. Once again, I think that Canada should keep their prices as they are now, and hopefully attract other countries to purchase more from us.