If Canada runs a trade surplus with Mexico and exchange rates are floating:
A) The peso will depreciate relative to the dollar
B) The dollar will depreciate relative to the peso
C) The prices of all foreign goods will fall for Canadians
D) The prices of all foreign goods will rise for Canadians

Question

Quizplus · Accepted Answer

If Canada runs a trade surplus with Mexico, it means that Canada is exporting more goods and services to Mexico than it imports from Mexico. As a result, there will be a higher demand for Canadian dollars from Mexican buyers, which will cause the price of the Mexican peso to depreciate relative to the Canadian dollar.

If Canada Runs a Trade Surplus with Mexico and Exchange