Question

1. What did the Mexican central bank decide to devalue the peso?

A. To boost exports

B. To contribute to the establishment of the new world currency, bancor

C. To increase the country's gold reserve

2. What were the results of the sudden devaluation of the peso?

A. Mexico joined the USSR to diversify its economy.

B. Unemployment rate and inflation rose significantly.

C. Foreign Investments flew out of the country.

D. None of the above alternatives is correct.

E. B & C are correct.

3. Why did the Mexican government issue bonds nominated in peso with a payback in US dollar?

A. To guarantee payment in US dollar

B. To maintain political instability

C. To revive the classical gold standard

D. To foresee the creation of bitcoin

Answer 1

1. (B)

Reason: This will reduce the demand for Peso and thus it will get devalued

2. (E) B & C are correct

Reason: A devalued Peso made Mexico less attractive in the foreign market. Unemployment increased due to lower production and Investment started flowing out of the economy

3. (A)

Reason: This would lead to political stability as repayment would be gauranteed