Suppose Canada has a merchandise trade deficit and
Mexico has a merchandise trade surplus.The two coun-
tries have a flexible exchange rate system,so the Mexi-
can peso appreciates and the Canadian dollar depreci-
ates.It is noticed,however,that soon after the
depreciation of the Canadian dollar,CanadaÕs trade
deficit grows instead of shrinks.Why might this occur?
Idk the answerrr. i need help!:confused::confused::confused: