If the Nominal Interest Rates in the United States and Canada

Multiple Choice

If the nominal interest rates in the United States and Canada are 8 percent and 12 percent, respectively, the real interest rates are the same, and the real exchange rate is fixed, then the market's expectation about the number of Canadian dollars to be received for a U.S. dollar a year from now will be that it will:

A) decrease by 8 percent.
B) decrease by 4 percent.
C) increase by 4 percent.
D) increase by 5 percent.