Exhibit 18-7 -Imagine There Are Only Two Countries in the World,Mexico and the World,Mexico

question 214

Multiple Choice

Exhibit 18-7
-Imagine there are only two countries in the world,Mexico and Canada,and two currencies,pesos and Canadian dollars.If Mexico's central bank wants to protect its currency from depreciating in response to the demand shift shown in Exhibit 18-7,which of the following is most likely to be the policy it will choose?

• A)increasing the supply of pesos
• B)decreasing the supply of Canadian dollars
• C)purchasing Canadian dollars with newly issued pesos
• D)purchasing pesos with reserves of Canadian dollars
• E)selling pesos to Canadians

---

Definitions:

Custody

A court-mandated ruling regarding which divorced parent will have the primary responsibility for the children’s upbringing.

Separation Agreement

A legal document that outlines the terms of a separation between married or common-law partners, detailing arrangements such as asset division, child custody, and support payments.

Child Support

Financial contributions required by law to be made by a non-custodial parent to support their minor children.

Economic Well-Being

refers to the overall financial health of an individual, community, or nation, measured by factors such as income, employment, and access to resources.