If the exchange rate is initially $1 = 12.95 pesos but changes to $1 = 15 pesos, then the dollar has _____ and the price in Mexico of a $10,000 U.S.-built Harley Davidson motorcycle has _____.

Question

Quizplus · Accepted Answer

When the exchange rate changes from $1 = 12.95 pesos to $1 = 15 pesos, it means that the value of the peso has weakened and the dollar has strengthened. This is a case of appreciation of the dollar. Therefore, the price of the motorcycle in Mexico, when converted to dollars, will increase.

If the Exchange Rate Is Initially $1 = 12