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13) Suppose the interest rate in Canada falls and the interest rate in Japan remains the same. Interest rate parity implies t
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C) the yen is expected to depreciate against the dollar.

A decrease in the interest rate in Canada implies a relative rise in interest rates in Japan. This means that the interest rate in Japan has increased. Since an increase in interest rate leads to reduction in the inflation rate and depreciation of a currency, the yen is expected to depreciate against the dollar.

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