If the Inflation Rate in Canada Is Higher Than That

question 20

Multiple Choice

If the inflation rate in Canada is higher than that in Mexico and productivity is growing at a slower rate in Canada than in Mexico, then, in the long run, ________, everything else held constant.

• A) the Mexican peso will appreciate relative to the Canadian dollar
• B) the Mexican peso will depreciate relative to the Canadian dollar
• C) the Mexican peso will either appreciate, depreciate, or remain constant relative to the Canadian dollar
• D) there will be no effect on the Mexican peso relative to the Canadian dollar

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Definitions:

Single Purpose

Designed or intended for one specific use or objective.

Limited Time

A restricted period designated for a specific purpose or event.

Common Stockholders

Individuals or entities that own common shares in a corporation, entitling them to vote and share in the profits.

Preferred Stockholders

Individuals or entities that own preferred shares in a company, granting them certain advantages over common stockholders, such as priority in dividend payments and assets during liquidation.