2. If investors can earn ten percent interest in an account in Mexico but just three percent in the US, those investors will

A.) continue to invest in the United States and have no effect on the exchange rate.

B.) want to invest in Mexico and cause the exchange rate to rise.

C.) try to do anything possible to keep the exchange rate from changing.

D.) want to invest in Mexico and cause the exchange rate to fall.

Question

Delaney Lucero

Business

13 December, 08:31

2. If investors can earn ten percent interest in an account in Mexico but just three percent in the US, those investors will

A.) continue to invest in the United States and have no effect on the exchange rate.

B.) want to invest in Mexico and cause the exchange rate to rise.

C.) try to do anything possible to keep the exchange rate from changing.

D.) want to invest in Mexico and cause the exchange rate to fall.

+5

Answers (1)

Know the Answer?

Jaxson Hodge · Answer 1

I believe that the answer for this would be option D. Given that investors can acquire ten percent interest in an account in Mexico, but only three percent in the United States, what will happen is that those investors will want to invest in Mexico and cause the exchange rate to fall.