Last week, 16 Mexican pesos could purchase one Canadian dollar.This week, it takes 14 Mexican pesos to purchase one Canadian dollar.This change in the value of the dollar will ________ exports from Canada to Mexico and ________ Canadian aggregate demand.
A)increase; increase
B)decrease; decrease
C)increase; decrease
D)decrease; increase

Question

Quizplus · Accepted Answer

A decrease in the value of the Canadian dollar relative to the Mexican peso makes Canadian goods cheaper for Mexican consumers. This will increase exports from Canada to Mexico. An increase in exports will result in an increase in aggregate demand in Canada. Therefore, the correct choice is A.

Last Week, 16 Mexican Pesos Could Purchase One Canadian Dollar