Question

How would a decrease in U.S. capital investment by Peruvians impact the supply of the Peruvian sol and the U.S. dollar price of the sol? Supply of sols / U.S. dollar Price of sol (3 points)

Answer 1

Answer: The Peruvian Sol supply will be reduced.

A rise in price of the Peruvian Sol against the U.S. Dollar.

The US dollars price for Peruvian Sol will increase.

Explanation:When there is a decreased Peruvian capital investment in the U.S. The need to source for the U.S. Dollar by Peruvian will decline,making the Peruvian Sol supply to the U.S. to decrease.

A decrease in capital investment by the Peruvians will ensure that they don't source for the U.S Dollar to buy for spending in the U.S economy.

This will lead to an increased U.S Dollar price for the Peruvian Sol due to a reduced supply of the Peruvian Sol.

The supply of Peruvian Sol to the U.S. economy will Decline.