Would each of the following groups be happy or unhappy if the Mexican peso appreciates against the U.S. dollar? Answer the question for each of the following:
(a) The U.S. pension funds holding Mexican government bonds
(b) U.S. tourists planning a trip to Mexico
(c) Mexican exporting manufacturers
(d) A Mexican firm trying to buy properties overseas
(a) Happy. The Mexican bonds are a safe haven for U.S. pension holders for now.
(b) Unhappy. It now costs more to travel to Mexico.
(c) Unhappy. The goods and services of Mexican exporters become relatively more expensive than their counterparts in the United States.
(d) Happy. The Mexican peso can buy more American dollar and thus more property than would be the case otherwise.
You might also like to view...
Economists studying the impact of direct pegs on trade found that direct pegs:
A) increased levels of trade by 21%. B) increased levels of trade by 44%. C) increased levels of trade by 58%. D) had no effect on trade levels.
If the nominal interest rate is 8 percent and the current inflation rate is 3 percent, approximately what is the real interest rate?
A) 11 percent B) 8 percent C) 5 percent D) 3 percent