If Mexico experiences a period of stable prices while the United States experiences rapid inflation, what will happen in Mexico?
A)An increase in aggregate supply
B)A decrease in aggregate supply
C)A decrease in aggregate demand
D)An increase in aggregate demand

Question

Quizplus · Accepted Answer

When the United States experiences rapid inflation while Mexico's prices remain stable, goods and services in Mexico become relatively cheaper for consumers and businesses in the United States. This leads to an increase in demand for Mexican goods and services, thereby increasing Mexico's aggregate demand.

If Mexico Experiences a Period of Stable Prices While the United