If interest rates in Mexico decrease while the 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

Decreasing interest rates in Mexico would make the Mexican currency less attractive for foreign investors seeking higher yields. This would lead to a decrease in demand for Mexican pesos, resulting in an increase in the supply of Mexican pesos in the foreign exchange market.

If Interest Rates in Mexico Decrease While the Interest Rates