If the Exchange Rate Is Initially $1 = 12

question 45

Multiple Choice

If the exchange rate is initially $1 = 12.95 pesos but changes to $1 = 15 pesos,then the dollar has _____ and the price in Mexico of a $10 000 Canadian-built Harley Davidson motorcycle has _____.

• A) depreciated;decreased
• B) depreciated;increased
• C) appreciated;increased
• D) appreciated;decreased

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Definitions:

Investment Capital

Funds invested in a project, company, or any economic endeavor with the expectation of generating a future return.

Efficient Markets

A financial market theory suggesting that asset prices fully reflect all available information, making it impossible to consistently achieve higher returns than the overall market.

Profit Opportunities

Situations where individuals or firms can earn excess returns due to discrepancies in information, prices, or resources.

Economic Losses

Financial losses experienced by individuals, businesses, or economies as a result of factors such as poor investment decisions, natural disasters, or market downturns.