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Refer to the Diagram Below Where D and S Are

question 64

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Refer to the diagram below where D and S are Canada's demand for and supply of pesos.At the equilibrium exchange rate, E, Canada's balance of payments is in equilibrium.Under a system of flexible exchange rates, the shift in demand from D1 to D2 will: Refer to the diagram below where D and S are Canada's demand for and supply of pesos.At the equilibrium exchange rate, E, Canada's balance of payments is in equilibrium.Under a system of flexible exchange rates, the shift in demand from D<sub>1</sub> to D<sub>2</sub> will:   A) ultimately cause Canadian exports to decline and its imports to rise. B) cause the dollar price of pesos to increase. C) cause the peso to depreciate. D) cause the dollar to depreciate.


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