The United States dollar-Mexican peso exchange market is initially in equilibrium. Suppose there is a decrease in demand for U.S. dollars. Holding everything else constant, this will result in a movement along the _____ of U.S. dollars and a(n) _____ in pesos per U.S. dollar.

Question

Quizplus · Accepted Answer

A decrease in demand for U.S. dollars will result in a movement along the supply curve of U.S. dollars, leading to a decrease in the exchange rate, meaning fewer pesos per U.S. dollar.

The United States Dollar-Mexican Peso Exchange Market Is Initially in Equilibrium