Suppose a hefty rise in the demand for Mexican pesos create a chronic shortage of this currency in the foreign exchange market. Which of the following steps should be adopted by the Mexican government to eliminate this shortage?
a. The government should impose a ban on Mexican exports.
b. The government should devalue the peso.
c. The government should print more pesos to increase its supply.
d. The government should allow the peso to appreciate.
e. The government should allow the peso to depreciate.
d
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The decline of the greenback against gold made imports more expensive
Indicate whether the statement is true or false
Assume that consumers consider rice and potatoes to be substitutes, so that when the price of rice rises, consumers purchase less rice and more potatoes. When the CPI is computed following the increase in the price of rice, it takes into account
a. the increase in the price of rice. b. the decrease in the quantity of rice purchased and the increase in the quantity of potatoes purchased. c. Both (a) and (b) are correct. d. None of the above is correct.