Suppose a year ago the exchange rate between Mexican pesos and ...

[tth]

Suppose a year ago the exchange rate between Mexican pesos and dollars was 13.5 pesos per dollar, and that according to relative PPP the exchange rate was in equilibrium.
 
  Furthermore, assume that since then, Mexican inflation has been 12 percent while the U.S. inflation has been 3 percent. If according to relative PPP the peso is now said to be overvalued, what is a possible exchange rate consistent with this assertion? A) 13.5 pesos per dollar.
  B) 14.72 pesos per dollar.
  C) 15 pesos per dollar.
  D) 20 pesos per dollar.

Question 2

If Slovenia is a small country in world trade terms, then if it imposes a large series of tariffs on many of its imports, this would
 
  A) have no effect on its terms of trade.
  B) improve its terms of trade.
  C) deteriorate its terms of trade.
  D) decrease its marginal propensity to consume.
  E) increase its exports.

[ilianabrrr]

Answer to Question 1

A

Answer to Question 2

A

[tth]

Thank you

[ilianabrrr]

Happy to help you