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If the 2005 inflation rate in Canada is 4 percent, and the inflation rate in Mexico is 2 percent, then the theory of relative purchasing

If the 2005 inflation rate in Canada is 4 percent, and the inflation rate in Mexico is 2 percent, then the theory of relative purchasing power parity predicts that, during 2005, the value of the Canadian dollar in terms of Mexican pesos will

fall by 2 percent.

fall by 6 percent.

stay unchanged

rise by 2 percent.

rise by 6 percent.

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