Multiple-Choice Questions 1. Following a peso appreciation relative to the dollar, which of the following results is

Question:

Multiple-Choice Questions
1. Following a peso appreciation relative to the dollar, which of the following results is expected to occur?
a. Prices in the United States would rise, and prices in Mexico would rise.
b. Prices in the United States would rise, and prices in Mexico would fall.
c. Prices in the United States would fall, and prices in Mexico would rise.
d. Prices in the United States would fall, and prices in Mexico would fall.
2. Following a peso appreciation relative to the dollar, which of the following results is expected to occur?
a. U.S. consumers would benefit, and Mexican producers would benefit.
b. U.S. consumers would be hurt, and Mexican producers would benefit.
c. U.S. consumers would benefit, and Mexican producers would be hurt.
d. U.S. consumers would be hurt, and Mexican producers would be hurt.
3. Following an increase in Mexican interest rates relative to U.S. interest rates, which caused Mexican consumers to borrow abroad to consume domestically, which of the following is expected to occur?
a. The dollar would appreciate relative to the peso, and Mexican prices would increase.
b. The dollar would appreciate relative to the peso, andMexican prices would decrease.
c. The dollar would depreciate relative to the peso, andMexican prices would increase.
d. The dollar would depreciate relative to the peso, and Mexican prices would decrease.
4. Following an increase in Mexican interest rates relative to U.S. interest rates, which caused Mexican investors to borrow abroad to invest abroad, which of the following would occur?
a. The dollar would appreciate relative to the peso, and Mexican prices would increase.
b. The dollar would depreciate relative to the peso, and Mexican prices would decrease.
c. The dollar would depreciate relative to the peso, and Mexican prices would increase.
d. The would not be affected, and neither would Mexican prices.
5. How does domestic inflation in China affect the Big Mac Index?
a. The price of a Chinese Big Mac would increase relative to the U.S. price.
b. The price of a Chinese Big Mac would decrease relative to the U.S. price.
c. The Big Mac Index is not affected by inflation.

Exchange Rate
The value of one currency for the purpose of conversion to another. Exchange Rate means on any day, for purposes of determining the Dollar Equivalent of any currency other than Dollars, the rate at which such currency may be exchanged into Dollars...