Question

An increase in Mexico’s demand for United States goods would cause the value of the dollar to

Answer 1

An increase in demand for US goods would cause the US dollar to appreciate in value, because the law of supply and demand would say that as the demand for something increases, so does the price.

Answer 2

It would drive the dollar to appreciate.

Step-by-step explanation:

The exchange rate is the relationship between local currency and foreign currency. Exchange rate fluctuation is determined by the supply and demand of the foreign currency, ie the dollar. In the case of Mexico, the increase in demand for commodities would increase demand for dollars, culminating in their appreciation. This is because increasing demand for any good raises its price.