Explain how an increase in the Mexican demand for American goods leads to a change in the Mexican peso relative to the U.S. dollar
Mexicans who wish to buy more American goods will need more dollars. This increase in demand for dollars increases the price of dollars (relative to the peso) on the foreign exchange market. The peso has, therefore, depreciated relative to the dollar, and the dollar has appreciated relative to the peso. A peso will buy fewer dollars than before, and a dollar will buy more pesos..
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A firm's average total cost is $80, its fixed cost is $1000, and its output is 100 units. Its average variable cost
A) is less than $40. B) is between $40 and $60. C) is more than $60. D) cannot be determined without more information.
When a monopolist engages in perfect price discrimination, the quantity produced and sold
A) could be lower, higher, or the same as that produced and sold if it adopted a single price. B) is lower than the quantity produced and sold if it adopted a single price. C) is larger than the quantity produced and sold if it adopted a single price. D) is the same level as that produced and sold if it adopted a single price.
In a competitive marketplace, prices adjust until
A) MRS's are equal to zero. B) excess supply equals excess demand equals zero in all markets. C) each consumer has maximized utility subject to his budget constraint. D) all firms earn zero profit.
Which of the following offers theories to explain why the government, like the private sector, may also "fail"?
a. Social economics. b. Public choice theory. c. Rational expectations theory. d. Keynesian economics.