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# Suppose the annual rate of inflation in Taiwan is 6.66%, and the annual rate of inflation in Mexico is 5.99%. If the Mexican peso depreciates

Suppose the annual rate of inflation in Taiwan is 6.66%, and the annual rate of inflation in Mexico is 5.99%. If the Mexican peso depreciates relative to the Taiwan dollar by 4% in real terms, then which of the following would be correct?

a, Nominal exchange rate appreciation by 4.825%.

b. Nominal exchange rate depreciation by 3.393%.

c. Nominal exchange rate appreciation by 3.512%.

d. Nominal exchange rate depreciation by 4.603%.

e. There is no change in the nominal exchange rate.

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