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The U.S., Argentina, and Canada commonly engage in international trade with each other. All the products traded can easily be produced in all three countries.
The U.S., Argentina, and Canada commonly engage in international trade with each other. All the products traded can easily be produced in all three countries. The traded products are always invoiced in the exporting countrys currency. Assume that Argentina decides to peg its currency (the peso) to the U.S. dollar and the exchange rate will remain fixed. Assume that the Canadian dollar appreciates substantially against the U.S. dollar during the next year. What is the likely effect (if any) of the Canadian dollars exchange rate movement with Peso? What is the likely effect (if any) on the volume of Argentina's exports to Canada? Explain
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