If the inflation rate in Canada is higher than that in Mexico and productivity is growing at a slower rate in Canada than in Mexico, then, in the long run, ________, everything else held constant.

Question

Quizplus · Accepted Answer

Higher inflation and lower productivity growth in Canada compared to Mexico would, in the long run, lead to the appreciation of the Mexican peso relative to the Canadian dollar, as Mexico's goods become relatively cheaper and more competitive internationally.

If the Inflation Rate in Canada Is Higher Than That