Imagine that there are only two nations in the world, the United States and Mexico. If Americans buy more goods made in Mexico, other things constant, the
A) U.S. demand curve for Mexican pesos will shift rightward
B) U.S. demand curve for Mexican pesos will shift leftward
C) U.S. supply curve of Mexican pesos will shift leftward
D) U.S. supply curve of Mexican pesos will shift rightward

Question

Quizplus · Accepted Answer

When Americans buy more goods from Mexico, they need more Mexican pesos to pay for these goods, increasing the demand for pesos and shifting the U.S. demand curve for Mexican pesos to the right.

Imagine That There Are Only Two Nations in the World