An increase in the price level in the United States relative to the price level in Mexico will cause an appreciation of the dollar against the peso.

Name: An increase in the price level in the United States relative to the price level in Mexico will cause an appreciation of the dollar against the peso.
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Question

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An increase in the price level in the United States relative to Mexico makes U.S. goods more expensive, reducing demand for dollars and leading to a depreciation of the dollar against the peso.

An Increase in the Price Level in the United States