Question

Suppose that the exchange rate between the U.S. dollar and the Mexican peso is 1 peso = $0.11. If the U.S. dollar price per Mexican peso changes to 1 peso =$0.10, the peso is said to have __________ and the dollar to have __________.

Answer 1

If the exchange rate between the U.S. dollar and the Mexican peso is 1 peso = $0.11, and the U.S. dollar price per Mexican peso changes to 1 peso =$0.10, the peso is said to have depreciated and the dollar to have appreciated.

Step-by-step explanation:

Depreciation is an economic term that indicates that a certain currency falls in value relative to another currency.

The opposite is appreciation: the currency in question rises in value relative to another currency.

Because of the change in the exchange rate compared to the other currency, you can buy more or less with your own currency in the period before the change in the exchange rate.