1x Mexico is experiencing high inflation while Canada is enjoying a steady GDP and I stable inflation.. What should happen in the foreign exchange market? A square a depreciation of Mexico's currency B square a decrease in the supply of Mexico's currency C square a decrease in the demand for Canada's currency D square an increase in the supply for Canada's currency an increase in the demand for Mexico's currency

To determine what should happen in the foreign exchange market, we need to consider the economic conditions in Mexico and Canada.<br /><br />Given that Mexico is experiencing high inflation while Canada is enjoying a steady GDP and stable inflation, it is likely that investors would prefer to hold their assets in Canada due to the more stable economic environment. This would lead to an increase in the demand for Canada's currency.<br /><br />Therefore, the correct answer is:<br /><br />C $\square$ a decrease in the demand for Canada's currency