If interest rates in Mexico decrease while interest rates in the United States remain unchanged then
A) the supply of Mexican pesos will increase.
B) the supply of Mexican pesos will decrease.
C) the supply of U.S. dollars will increase.
D) None of the above answers is correct.

Question

Quizplus · Accepted Answer

When interest rates in Mexico decrease while those in the United States remain unchanged, investors are likely to find U.S. investments more attractive. This leads to an increased supply of Mexican pesos as investors sell pesos to buy U.S. dollars, aiming to invest in the United States where the returns are now relatively higher.

If Interest Rates in Mexico Decrease While Interest Rates in the United