There is demand for and supply of dollars and a demand for and supply of pesos. Under a flexible exchange rate system, if income growth in the United States is greater than income growth in Mexico, then the
A) demand for dollars will shift to the right and the demand for pesos will shift to the left.
B) demand for pesos will shift to the right and the supply of dollars will shift to the left.
C) demand for pesos will shift to the left and the supply of pesos will shift to the right.
D) supply of pesos will shift to the right and the supply of dollars will shift to the right.
E) demand for pesos will shift to the right and the supply of dollars will shift to the right.
Correct Answer:
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