Suppose that the exchange rate between the U.S.dollar and the Mexican peso starts out at $0.12 per peso,and then changes to $0.09 per peso.The result will be that Americans will buy __________ pesos because Mexican goods become relatively __________ expensive.

Question

Quizplus · Accepted Answer

When the exchange rate changes from $0.12 to $0.09 per peso, each dollar can buy more pesos, making Mexican goods cheaper for Americans. Therefore, Americans will buy more pesos to take advantage of the lower prices, making Mexican goods relatively less expensive.

Suppose That the Exchange Rate Between the U