Assume that the total value of investment transactions between the United States and Mexico is minimal. Also, assume that the total dollar value of trade transactions between these two countries is very large. Now assume that Mexico's inflation has suddenly increased, and Mexican interest rates have suddenly increased.

a) Please draw a graph to show how the equilibrium value of Mexican Pesos will change.

b) Whats more important for Mexican Pesos given the circumstances, change in interest rates, or change in inflation in Mexico?