Question

In January 2002, the Argentine peso changed in value from Ps1.00/$ to Ps1.40/$, thus, the Argentine peso ___________________ against the U.S. dollar. Question 50 options: stregthened weakened appreciated maintain natural parity

Answer 1

Weakened

Step-by-step explanation:

When initially in January 2002, the rate of exchange was 1 Argentine Peso for 1 U.S. Dollar.

Later on, it is observed that the rate of exchange is 1.40 Argentine Peso for 1 U.S. Dollar.

It is clear that buying capacity of dollar has increased and that of peso has decreased.

Argentine Peso is depreciated by 40% that earlier 1 Dollar = 1 Peso

Now, decreased value = 1.4 Peso - 1 Peso = 0.4 Peso.

Thus, (change in value)/(Actual Initial Value) = 0.4/1 = 40%

Peso has depreciated or weakened by 40%.