Question

"Traveling in Mexico is much cheaper now than it was ten years ago," says a friend. "Ten years ago, a dollar bought 10 pesos; this year, a dollar buys 15 pesos." Given that total inflation over this period was 25 percent in Canada and 100 percent in Mexico, has it become more or less expensive to travel in Mexico? Consider the following example that compares the price of a Canadian hot dog to a Mexican taco. Answer all three questions to determine whether your friend is right or wrong. Ten years ago, a dollar bought ten pesos. Assume that at that time, a Canadian hot dog cost $1.00, and a Mexican taco cost 10 pesos. a. Ten years ago the price in dollars) of a Mexican taco was $0.10 em now costs $1.25. With 100 percent inflation, the Today, a dollar buys 15 pesos. With 25 percent inflation, a car price of a Mexican taco is now 20 pesos. about us Careerspracy policy MacBook Pro

Answer 1

Blank 1) $1.00, as the rate of 1 Dollar is 10 Peso, and the price of 1 Taco is also 10 Peso only, which comes for $1.

Blank 2) $1.33, as the rate of 1 Dollar is 15 Peso, but Taco comes for 20 Peso.

Blank 3) Smaller, as the rate of Peso per Dollar should be less, to make it cheaper to buy in dollar