As Venezuela's economy has collapsed about 4.5 million people have fled the country out of a roughly 30 million initial population. Many move next door to Columbia. In early December 2019 the U.S. dollar was equal to roughly 3,500 Columbian pesos. The official (Venezuelan government) exchange rate between the dollar and bolivar is $1=B10. The black market (international) exchange rate was roughly $1=B40,000, which we will round down to $1=B35,000 for the following questions.

42. Suppose you are politically connected and can convert B100 to dollars at the official rate. How many dollars can you buy?

43. You then buy Columbian pesos. How many do you have?

44. What is the exchange rate between the international bolivar rate and the Columbian peso?

45. If you spend half of the pesos and exchange the rest at the black market rate back to bolivars, how many do you end up with?

46. The mass outmigration of Venezuelans has led to large amount of remittances to the country. That is, Venezuelans living abroad send money they earn elsewhere back to Venezuela. This will cause the Bolivar to ____ relative to the Columbian peso, assuming large amounts of remittances come from Columbia.

1. appreciate
2. depreciate