If,under a Fixed Exchange Rate System,the Dollar Price of a Mexican

question 110

Multiple Choice

If,under a fixed exchange rate system,the dollar price of a Mexican peso is above its equilibrium level,then the

• A) dollar is undervalued.
• B) peso is undervalued.
• C) dollar has appreciated.
• D) peso has depreciated.

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Definitions:

Short Run

A period in economics during which at least one factor of production is fixed, limiting the ability to increase production in response to increased demand.

Profitable

A financial status where the income generated from business activities exceeds the expenses, taxes, and costs associated with maintaining the business.

Marginal Revenue

The additional revenue that a company earns from selling one more unit of a product or service.

Marginal Cost

The rise in expense associated with the production of an extra unit of a product or service.