Currency Depreciation Boosts Export Competitiveness

Steps:

• Peso depreciation means more pesos per dollar, lowering the peso value relative to the dollar.
• Mexican exports priced in pesos now cost fewer dollars to foreign buyers.
• This reduces the effective price of Mexican goods abroad, increasing demand.
• Overall, it stimulates the Mexican economy through higher export volumes.

Why B is correct:

• Depreciation lowers the foreign-currency price of exports, per the exchange rate's impact on trade competitiveness (e.g., real exchange rate formula: nominal rate adjusted for price levels).

Why the others are wrong:

• A: Tariffs are set by policy, unaffected by exchange rates.
• C: Imports become costlier in pesos, raising their price.
• D: Lower export prices typically increase export volume via higher foreign demand.

Final answer: B