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The U.S. bi-lateral real exchange rate with Mexico is defined as S/(P MEX /P US ), where S is the nominal exchange rate in pesos

The U.S. bi-lateral real exchange rate with Mexico is defined as S/(PMEX/PUS), where S is the nominal exchange rate in pesos per U.S. dollar (pesos/$), PMEX is the Mexican consumer price level, and PUS is the U.S. consumer price level.What would the effect on U.S. competitiveness be, other things being equal, of:

a.A fall in the peso relative to the dollar?

b.A rise in Mexican inflation?

c.A rise in U.S. inflation?

d.A simultaneous rise in the peso and decline in Mexican inflation of about the same amount (say, 10%)?

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