If you are indifferent between investing $1000 for one year in a U.S. Treasury security that has an interest rate of 5% or in a Canadian government security that has an interest rate of 8%, you must be expecting
A) the inflation rate in the United States will be higher than the inflation rate in Canada during the year.
B) the U.S. dollar to depreciate against the Canadian dollar by 3% during the year.
C) the U.S. dollar to appreciate against the Canadian dollar by 3% during the year.
D) productivity growth in Canada to be greater than productivity growth in the United States during the year.
C
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