Solved Questions

What does it mean to say that the U.S. dollar has depreciated in value in relation to the Mexican peso? What does it mean to say that the Mexican peso has appreciated in value relative to the U.S. dollar?

Explain the link between the Mexican demand for U.S. goods and the supply of pesos. Next, explain the link between the U.S. demand for Mexican goods and the supply of dollars.

Under a fixed exchange rate system, why might the United States want to devalue its currency?

How does an overvalued dollar affect U.S. exports and imports?

Under a fixed exchange rate system, if one currency is overvalued, then another currency must be undervalued. Explain why this statement is true.