If the Inflation Rate in the United States Is Higher

question 35

Multiple Choice

If the inflation rate in the United States is higher than that in Mexico and productivity is growing at a slower rate in the United States than in Mexico,then,in the long run,________,everything else held constant.

• A)the Mexican peso will appreciate relative to the U.S. dollar
• B)the Mexican peso will depreciate relative to the U.S. dollar
• C)the Mexican peso will either appreciate,depreciate,or remain constant relative to the U.S. dollar
• D)there will be no effect on the Mexican peso relative to the U.S. dollar