Between 1993 and 2013,the Mexican peso fell against the Canadian dollar by almost three-fourths of its original value.However,economists have concluded that this did not result in a corresponding fall in the price of Mexican products expressed in dollars.What explains this apparent paradox?
A) Interest rates in Canada were increasing.
B) Inflation in Canada was moving up steadily.
C) The inflation rate in Mexico over that same period was higher than that in Canada.
D) The real exchange rate had fallen.
Correct Answer:
Verified
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