Final answer:
The correct answer is C, where one euro can be exchanged for nine Mexican pesos. This exchange rate reflects the comparative economic value between the two currencies.
Step-by-step explanation:
An exchange rate of 1:9 between the European euro and Mexican pesos means for every euro you exchange, you'll receive nine Mexican pesos. Therefore, the accurate explanation is C. It takes only one euro to buy nine pesos. This relationship indicates the comparative value of one currency to another in the foreign exchange market.
In the context of supply and demand in foreign exchange markets, factors like expectations about future exchange rates can significantly impact the equilibrium exchange rate. For example, if a business newspaper predicts that the Mexican peso will appreciate, this can increase demand and reduce supply for pesos, resulting in an appreciation of the peso against other currencies.