Assume a U.S.-based MNC has a Chilean subsidiary that annually remits 30 million Chilean pesos to the United States. If the peso ____, the dollar amount of remitted funds ____.
A) appreciates; decreases
B) depreciates; is unaffected
C) appreciates; is unaffected
D) depreciates; decreases
E) depreciates; is unaffected AND appreciates; is unaffected

Question

Quizplus · Accepted Answer

If the peso depreciates, meaning it loses value relative to the dollar, then it will take more pesos to equal the same amount of dollars. Therefore, the dollar amount of remitted funds will decrease.