Final answer:
If the US has higher income than Mexico, the value of the USD relative to the MXN is likely to appreciate due to increased demand for the US dollar as investors expect a stronger US economy.
Step-by-step explanation:
The value of a currency is influenced by various economic factors, including income differences. If the US has higher income than Mexico, investors might expect the US economy to be stronger. The demand for US dollars would likely increase, causing the USD/MXN exchange rate to appreciate. This is based on the concepts illustrated in the provided information where an appreciation in one currency leads to a depreciation of the other, and vice versa. More importantly, expectations about future exchange rates play a crucial role in the current value of a currency. The expectation of a stronger peso in the future, for instance, results in higher current demand for the peso and less supply, leading to an appreciation of the peso according to Figure 15.6.