Assume a U.S.-based MNC has a Chilean subsidiary that annually remits 30 million Chilean pesos to the U.S. If the peso ____, the dollar amount of remitted funds ____.
A) appreciates; decreases
B) depreciates; is unaffected
C) appreciates; is unaffected
D) depreciates; decreases
E) B and C

Question

Quizplus · Accepted Answer

If the peso depreciates (loses value relative to the U.S. dollar), then it will take more pesos to equal the same amount of U.S. dollars. Therefore, the dollar amount of remitted funds will decrease.