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If the value of the US currency in relation to the Mexican Peso changed from US$1...

If the value of the US currency in relation to the Mexican Peso changed from US$1 = 2 MXN to US$1 = 2.2 MXN, the value of the US ____ and net export to Mexico ____.

depreciates ; increases

depreciates ; decreases

appreciates ; decreases

appreciates ; increases

none of the answers given is correct

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Answer #1

The right answer is, the value of the US dollar appreciates and the net export to Mexico decreases. As we can see Mexican people have to pay more Mexican peso for one US dollar that implies the Mexican peso has depreciated and the US dollar has appreciated, also at the same time US people will import more goods from the Mexico as they can buy more goods with one dollar as compared to the situation before, therefore, the net exports to Mexico will decrease.

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