Explore BrainMass
Share

Explore BrainMass

    Currency fluctuations: Mexico, UK, income level, inflation r

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    27. A large increase in the income level in Mexico along with no growth in the U.S. income level is normally expected to cause (assuming no change in interest rates or other factors) a(n) ______ in Mexican demand for U.S. goods, and the Mexican peso should _______.
    a. increase; appreciate
    b. increase; depreciate
    c. decrease; depreciate
    d. decrease; appreciate

    28. Assume that the inflation rate becomes much higher in the U.K. relative to the U.S. This will place ____________ pressure on the value of the British pound. Also, assume that interest rates in the U.K. begin to rise relative to interest rates in the U.S. The change in interest rates will place ____________ pressure on the value of the British pound.
    a. upward; downward
    b. upward; upward
    c. downward; upward
    d. downward; downward

    © BrainMass Inc. brainmass.com October 9, 2019, 10:00 pm ad1c9bdddf
    https://brainmass.com/business/international-finance/currency-fluctuations-mexico-uk-income-level-inflation-r-204952

    Solution Preview

    27. A large increase in the income level in Mexico along with no growth in the U.S. income level is normally expected to cause (assuming no change in interest rates or other factors) a(n) ______ in Mexican ...

    Solution Summary

    This solution is comprised of a detailed explanation to answer what should happen in Mexican demand for U.S. goods and has what impact to the Mexican peso and how will the inflation rate in U.K. will have pressure on the value of the British pound.

    $2.19