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

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Definitions:

Accuracy

The degree to which a measurement, calculation, or specification conforms to the correct value or standard.

External Attribution

The process of attributing the cause of one's own or others' behavior to external factors or situations beyond one's control.

Incentives

Rewards or motivations provided to encourage specific behaviors or outcomes.

Simplify

No clear definition since "simplify" refers to the process of making something easier to understand or less complicated.