Suppose That the Nominal Exchange Rate Between the U

question 71

Multiple Choice

Suppose that the nominal exchange rate between the U.S.dollar and the Mexican peso is 0.10 dollars per peso.If Mexico's inflation is 10 percent and the United States' inflation is 0 percent,from the U.S.point of view,the real exchange rate

• A)appreciates to 0.11 dollars per peso.
• B)depreciates to 0.11 dollars per peso.
• C)appreciates to 0.09 dollars per peso.
• D)depreciates to 0.09 dollars per peso.

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