You go on vacation to Mexico and take $1,000 with you.During your time in Mexico,the peso appreciates in value relative to the dollar.It follows that

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When the peso appreciates in value relative to the dollar, it means that it now takes fewer pesos to equal one dollar. Therefore, when you exchange your $1,000 for pesos, you will receive fewer pesos than you would have before the appreciation. As a result, your purchasing power in Mexico will decrease, meaning that you will be able to buy fewer goods and services with your $1,000. Option A is incorrect, as it suggests that you will be able to buy more, which is not the case when the peso appreciates. Option C is incorrect, as the theory of purchasing power parity is not being tested here. Option D is also incorrect, as Mexican workers will in fact be able to buy more goods and services in Mexico when the peso appreciates, as their wages will be worth relatively more in pesos compared to the dollar.

You Go on Vacation to Mexico and Take $1,000 with You.During