Suppose That the Current Exchange Rate Between the Dollar and Peso

question 254

Multiple Choice

Suppose that the current exchange rate between the dollar and peso is $1 equals 10 pesos. If the exchange rate changes to $1 equals 8 pesos, which of the following is true?

• A) The dollar depreciates and U.S. exports become cheaper.
• B) The dollar appreciates and U.S. exports become cheaper.
• C) The peso depreciates and imports from Mexico become cheaper.
• D) The peso appreciates and imports from Mexico become cheaper.

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