If a Certain Automotive Part Can Be Purchased in Mexico

question 146

Multiple Choice

If a certain automotive part can be purchased in Mexico for 32 pesos or in the United States for $5.25, and if the nominal exchange rate is 8 pesos per U.S. dollar, then the automotive part:

• A)is more expensive in Mexico.
• B)is more expensive in the United States.
• C)is less expensive in the United States.
• D)costs the same in Mexico and the United States.

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Definitions:

Cash Earn

The process of receiving money as a result of selling goods or services, investments, or other business activities that generate income.

Trade Credit

Credit extended by suppliers for the purchase of their goods and services.