Which of the following is likely to result in long-run appreciation of the U.S.dollar relative to the peso?
A) Relatively high interest rates in Mexico
B) Relatively high labor productivity in Mexico
C) Tariffs applied by Mexico on computer imports from the United States
D) Stronger Mexican preferences for goods produced in the United States

Question

Quizplus · Accepted Answer

If Mexican consumers develop a stronger preference for U.S. goods, demand for the U.S. dollar will increase as they need more dollars to purchase these goods, leading to an appreciation of the U.S. dollar relative to the peso.

Which of the Following Is Likely to Result in Long-Run