The Figure Given Below Depicts the Equilibrium Exchange Rate Between

The figure given below depicts the equilibrium exchange rate between the U.S dollar and the Mexican peso.
Figure 13.2

-Refer to Figure 13.2. When the Mexican demand for U.S. dollars rises from D₂ to D₁ and the relevant supply curve is S₁:

A) the U.S. dollar depreciates in value relative to the peso.
B) the Mexican peso depreciates in value relative to the U.S. dollar.
C) the Mexican peso appreciates in value relative to the U.S. dollar
D) U.S. imports from Mexico decreases.
E) Mexican net exports to the United States becomes positive.

Correct Answer:

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