If the exchange rate moves from 10 Mexican pesos per U.S. dollar to 8 Mexican pesos per U.S. dollar, then the Mexican peso has ________ and the U.S. dollar has ________.
A)appreciated; appreciated
B)appreciated; depreciated
C)depreciated; appreciated
D)depreciated; depreciated

Question

Quizplus · Accepted Answer

Under the new conditions one dollar buys fewer Mexican pesos than before, so the dollar has depreciated and the peso has appreciated. This shows the reciprocal nature of currency valuation: when one currency appreciates the other currency depreciates against it.

If the Exchange Rate Moves from 10 Mexican Pesos Per