Suppose that the exchange rate between the U.S.dollar and the Mexican peso starts out at $0.11 per peso.If the exchange rate then changes to $0.13 per peso,there will be a(n)__________ in the quantity demanded of dollars by Mexicans,and therefore there will be a(n)__________ in the quantity supplied of pesos to the foreign exchange market.

Question

Quizplus · Accepted Answer

When the exchange rate changes from $0.11 to $0.13 per peso, it means that the peso has appreciated in value relative to the dollar. This makes the dollar cheaper for Mexicans, leading to an increase in the quantity demanded of dollars by Mexicans. Consequently, there will be an increase in the quantity supplied of pesos to the foreign exchange market as Mexicans exchange more pesos for dollars.

Suppose That the Exchange Rate Between the U