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Hello.
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So here we have that the demand in the u .s.
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For mexican pesos is downward sloping.
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This means there's going to be a negative association between the exchange rate, the er, and the demand for mexican pesos, where the exchange rate, the er, is the per unit price of mexican pesos in terms of dollars.
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Now, when there is an increase in the prices of their depreciation of u .s.
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Money, then the imports from mexico.
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Mexico will be more expensive for u .s.
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Residents, so they will import less.
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So the demand for mexican pesos will be reduced.
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And similarly, if the size of imports from mexico rises, then there will be more demand for mexican pesos.
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And in such a situation, the u .s.
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Currency will appreciate the price of mexican, as the mexican pesos falls.
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So the supply curve of mexican pesos to americans ' slopes upwards, this is going to then imply that there is a positive association with the price of mexican pesos in terms of u .s.
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Dollars and the supply of the mexican peso.
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So when there is a depreciation in the u .s.
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Currency or there is an increase in the prices, then the people of mexico will demand more goods from the u .s...