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The nominal interest rate for a particular investment is 8% in Canada and 12% in Mexico. Which of the following is true according to IFE?

The nominal interest rate for a particular investment is 8% in Canada and 12% in Mexico. Which of the following is true according to IFE?

The Canadian dollar will depreciate relative to the peso.

Inflation is expected to be higher in Canada than Mexico.

The real interest rate in Mexico is higher than in Canada.

None of the above.

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