If Americans develop a greater appreciation for Mexican-made goods, we should observe the following change(s) in the dollar-peso market:

Question

Quizplus · Accepted Answer

If Americans develop a greater appreciation for Mexican-made goods, they would need to exchange more dollars for pesos to purchase these goods, leading to an increase in demand for pesos, which would shift the demand curve for pesos rightward. This would create upward pressure on the price of pesos relative to dollars, leading to a depreciation of the dollar. A decrease in the demand for dollars would not necessarily follow, so neither A nor B is the best choice. While a movement down the supply curve of dollars could be a possible outcome, it is not as likely to occur as the rightward shift in the demand curve for pesos. Therefore, C is the best choice.

If Americans Develop a Greater Appreciation for Mexican-Made Goods, We