Suppose the exchange rate between Mexican pesos and Canadian dollars is 8 pesos per dollar.If the exchange rate goes to 6 pesos per dollar,what will happen to the exports of Canadian goods into Mexico?

Question

Quizplus · Accepted Answer

If the exchange rate between Mexican pesos and Canadian dollars goes from 8 pesos per dollar to 6 pesos per dollar, this means the Canadian dollar has appreciated relative to the peso. This makes Canadian goods relatively cheaper for Mexican buyers, which tends to increase demand for Canadian goods and exports. Therefore, the exports of Canadian goods into Mexico will tend to rise.

Suppose the Exchange Rate Between Mexican Pesos and Canadian Dollars