Question

If the inflation rate in Mexico was twice the rate in the United States, but the Mexican monetary authorities kept the peso-dollar exchange rate almost constant, which of the following would be true?
A. The high inflation rate in Mexico would increase its citizens' purchasing power.
B. Mexican products would be less expensive, while U.S.-made products would become comparatively more expensive.
C. The high inflation rate in Mexico would mean that its products would cost less overall.
D. Mexican products would be more expensive, while U.S.-made products would become comparatively less expensive.

Answer 1

Answer:A

Explanation:

The high rate of inflation in Mexico would increase its citizens purchasing power.