Suppose that Mexico decides to depreciate its peso. Which situation will MOST likely occur?

Question

Quizplus · Accepted Answer

Depreciation of the peso will make Mexican goods cheaper for foreigners to buy, stimulating exports, and reducing the demand for imports. Export-oriented Mexican businesses will benefit from increased international competitiveness, while Mexican businesses that rely on imports will suffer. This is because they will have to pay more for imported goods and services, reducing their profit margins, and potentially leading to higher prices for consumers. Therefore, Mexican businesses in export-oriented industries benefit, while Mexican businesses that rely on imports face difficulties.

Suppose That Mexico Decides to Depreciate Its Peso