Question

Suppose Mexicans suddenly develop a strong taste for Japanese anime (an animation style).

1. What happens to the value of the Mexican Peso in the foreign exchange market? What about Japanese Yen?
2. What happens to the quantity of net exports in Mexico, other than anime, as a result of your answer in part b? What about the Japan?

1.) Mexican Peso________________________

Japanese Yen _________________________

2.) Mexican net exports________________________

Japanese net exports ________________________

Answer 1

a) As the Mexicans have suddenly developed a taste for the Japanese anime they will be importing more, that will lead to a larger outflow of currency from Mexico and the Mexican peso will "depreciate" it will also "appreciate" the value of the Japanese Yen.

b) Mexican net exports will "decrease". and Japanese net exports will "increase" .

Answer 2

An influx of cultural intake.