A depreciation of the Mexican peso relative to the dollar would ________ Mexican firms that are exporting goods to Canada and would ________ Mexican firms that have borrowed in Canadian dollars.

Question

Quizplus · Accepted Answer

A depreciation of the Mexican peso relative to the Canadian dollar would make Mexican exports cheaper for Canadian buyers, which would help Mexican firms exporting goods to Canada. On the other hand, Mexican firms that borrowed in Canadian dollars would have to pay back more pesos to repay their loans, leading to higher costs and hurting their business.

A Depreciation of the Mexican Peso Relative to the Dollar