In the early 1990s,the inflation rate in Mexico was twice the rate in the United States,but the Mexican monetary authorities kept the peso / dollar exchange rate almost constant.For Mexican consumers
A) incomes rose dramatically.
B) interest rates fell to compensate for increased inflation.
C) Mexican products became less expensive while U.S.-made products became comparatively more expensive.
D) Mexican products became more expensive while U.S.-made products became comparatively less expensive.
E) all of these

Question

Quizplus · Accepted Answer

With the higher inflation rate, Mexican products would become more expensive relative to U.S.-made products if the exchange rate remained constant. Therefore, Mexican products became more expensive while U.S.-made products became comparatively less expensive.

In the Early 1990s,the Inflation Rate in Mexico Was Twice