Question: I need help solving this problem. Thank you! 2. Assume that Canada and Kenya are trading partners. a. If the real interest rate in Canada

I need help solving this problem.

Thank you!

2. Assume that Canada and Kenya are trading partners. a. If the real interest rate in Canada decreases, what will happen to the financial accounts for both Canada and Kenya. ( /4) b. Assume instead that Canada experiences significant inflation compared to Kenya. Draw the foreign exchange market for the Canadian currency and show what happens to the demand for Canadian dollars. Be sure to identify if the Canadian dollar will appreciate or depreciate? ( 14)

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