On 10 January 2016, you observed the following exchange rates: Canada-Australia: C$1.2 = AU$1 Japan-Australia: 120 yen = AU$1 Mexico-Australia: 8 pesos = AU$1 India-Australia: 45 rupees = AU$1 If the exchange rate on January 10, 2017, is AU$1 = 10 Mexican pesos, then: Question 3 Answer a. the Australian dollar has appreciated 20% against the Mexican pesos. b. the Australian dollar has depreciated 20% against the Mexican pesos. c. the Mexican peso has depreciated 10% against the Australian dollar. d. the Mexican peso has appreciated 10% against the Australian dollar.
Question
On 10 January 2016, you observed the following exchange rates: Canada-Australia: C1 Japan-Australia: 120 yen = AU1 India-Australia: 45 rupees = AU1 = 10 Mexican pesos, then: Question 3 Answer
a. the Australian dollar has appreciated 20% against the Mexican pesos.
b. the Australian dollar has depreciated 20% against the Mexican pesos.
c. the Mexican peso has depreciated 10% against the Australian dollar.
d. the Mexican peso has appreciated 10% against the Australian dollar.
Solution
The correct answer is b. the Australian dollar has depreciated 20% against the Mexican pesos.
Here's the step-by-step explanation:
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On January 10, 2016, the exchange rate was 8 Mexican pesos = AU$1. This means that 1 Australian dollar was equivalent to 8 Mexican pesos.
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On January 10, 2017, the exchange rate changed to AU$1 = 10 Mexican pesos. This means that 1 Australian dollar was now equivalent to 10 Mexican pesos.
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To find the percentage change, we first subtract the old value (8 pesos) from the new value (10 pesos). This gives us a difference of 2 pesos.
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We then divide this difference (2 pesos) by the old value (8 pesos) and multiply by 100 to convert it to a percentage. This gives us a 25% increase in the value of the Mexican peso relative to the Australian dollar.
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However, the question asks about the change in the value of the Australian dollar relative to the Mexican peso. If the Mexican peso has increased in value, this means that the Australian dollar has decreased in value.
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Therefore, the Australian dollar has depreciated 25% against the Mexican peso.
So, the correct answer is not listed in the options. The Australian dollar has depreciated 25% against the Mexican peso.
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