1. A good cost $1,246 in the US. And MXN 15,250 in Mexico. If the exchange rate of MXN 14.46/$, we would say that: A. The US dollar is overvalued by 6.14% B. The US. Dollar is undervalued by 6.14% C. The US. Dollar is undervalued by 1.06% D. The MXN is undervalued by 6.14% E. The MXN is undervalued by 1.06% 2. Suppose that we start with an initial exchange rate of $1.46/Euro. US inflation turns out to be 4% this year and British inflation is 6%. If the new exchange rate is $1.41/Euro, we would characterize U.S. export industries as having gotten: A. More competitive B. Less competitive 3.Given the following three exchange rate, is there a triangular arbitrage opportunity? (A triangular arbitrage opportunity exists when If the direct cross-exchange rate bid is greater than the indirect cross-exchange rate ask rate.) .8026/$ .6147/$ .7554/ A. Yes, there is a triangular arbitrage opportunity, Buy the directly (with s) and sell the indirectly for s B. No, there is not a triangular arbitrage opportunity C. Yes, there is a triangular arbitrage opportunity, Buy the directly (with s) and sell the directly for s D. Yes, there is a triangular arbitrage opportunity, Buy the indirectly (with s) and sell the indirectly for s E. Yes, there is a triangular arbitrage opportunity, Buy the indirectly (with s) and sell the directly for s 4.If the implied PPP exchange rate is $1.35 /, the US dollar is overvalued A. True B. False 5. U.S. inflation is 9% and inflation in Japan is 5%. If the US. Dollar depreciates 3% in nominal terms, which currency has appreciated in real terms? A. Neither currency B. The Japanese Yen C. Both currencies D. The US. dollar