There Is a Flexible Exchange Rate System and Only Two

question 1

Multiple Choice

There is a flexible exchange rate system and only two countries in the world,the United States and Mexico.If the inflation rate in the United States rises relative to the inflation rate in Mexico,it follows that

• A) the dollar will appreciate and the peso will depreciate.
• B) both the dollar and the peso will appreciate,although the peso will appreciate before the dollar appreciates.
• C) the dollar will depreciate and the peso will appreciate.
• D) both the dollar and the peso will depreciate,although the peso will depreciate before the dollar depreciates.
• E) There is not enough information to answer the question.

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Definitions:

International Economic Factors

Encompass global influences that impact the economic conditions of countries, such as trade policies, exchange rates, and international investment flows.

Culture as Economic Indicator

Culture as an economic indicator involves looking at cultural trends and values to glean insights into economic health and consumer behavior.

Dialectic

A method of argument for resolving disputes by logically debating contradictions and oppositions to reach a synthesis or conclusion.

Learned Behavior

Behavior that is acquired through experience or by observing the actions of others.