Suppose the real exchange rate of 10 Mexican pesos to the dollar moves to 9 pesos to the dollar.The dollar has ________________,making Mexican goods __________ expensive for Americans.
A) appreciated; less
B) appreciated; more
C) depreciated; less
D) depreciated; more

Question

Quizplus · Accepted Answer

The dollar has depreciated because it now exchanges for fewer pesos (from 10 to 9). This makes Mexican goods more expensive for Americans, as they now need more dollars to buy the same amount of pesos.

Suppose the Real Exchange Rate of 10 Mexican Pesos to the Dollar