To Encourage More Investment,Mexico Has Lowered Its Tax Rates to Reduce

Multiple Choice

To encourage more investment,Mexico has lowered its tax rates to reduce the user cost of capital.Argentina is unable to pay back its foreign debts,causing its expected future marginal product of capital to fall.Mexico's real exchange rate will ________ and its net exports will ________.

A) depreciate; fall
B) appreciate; rise
C) depreciate; rise
D) appreciate; fall