How Will an Interest Rate Decrease in Canada Affect Equilibrium

Multiple Choice

How will an interest rate decrease in Canada affect equilibrium in the foreign exchange market?

A) The equilibrium exchange rate will increase, and the equilibrium quantity of dollars traded cannot be determined.
B) The equilibrium exchange rate will decrease, and the equilibrium quantity of dollars traded cannot be determined.
C) The equilibrium exchange rate cannot be determined, and the equilibrium quantity of dollars traded will increase.
D) The equilibrium exchange rate will increase, and the equilibrium quantity of dollars traded will increase.
E) The equilibrium exchange rate cannot be determined, and the equilibrium quantity of dollars traded cannot be determined.