Suppose That,under a System of Flexible Exchange Rates,Mexicans Decide to Increase

Multiple Choice

Suppose that,under a system of flexible exchange rates,Mexicans decide to increase their investments in Canada.What will result?

A) Interest rates in Canada will fall.
B) Mexicans will want to buy more Canadian products at the new exchange rate.
C) The peso and the Canadian dollar will both appreciate in value.
D) The peso will depreciate and the Canadian dollar will appreciate in value.
E) The peso will appreciate and the Canadian dollar will depreciate in value.