Gabbi Johnson, Chapter 11, Question 5

I found it interesting that the exchange rate is so heavily based on tradable goods even though two thirds of goods are non tradable and are services. Wheelan used the example of buying televisions in Mexico and selling them for a profit in the us. In this scenario both the seller and the Mexican economy benefit. He is getting more money and the economy can boost because they are selling more goods. However this tactic would not work with any services so the rates are mainly based upon tradable goods as opposed to many other services.