Which of the following is likely to occur when the U.S.dollar is undervalued relative to the peso?

Question

Quizplus · Accepted Answer

When the U.S. dollar is undervalued relative to the peso, it means that the dollar buys less than it should in terms of pesos. This makes U.S. goods and services cheaper for those holding pesos, increasing the demand for dollars as they exchange pesos to buy these cheaper U.S. goods and services. Consequently, the demand for dollars in exchange for pesos will exceed the supply of dollars, as indicated in option C.

Which of the Following Is Likely to Occur When the U.S.dollar