Assume that the exchange rate moves from $1 = €1.2 to $1 = €0.97. This change in exchange rate indicates that:
A) the euro has depreciated in value.
B) the price of a holiday in Europe has become less expensive for U.S. residents.
C) the U.S. dollar price of European chocolate has fallen.
D) the U.S. dollar has appreciated in value.
E) the euro has appreciated in value.

Question

Quizplus · Accepted Answer

The exchange rate change from $1 = €1.2 to $1 = €0.97 indicates that the euro has appreciated in value because it now takes fewer euros to equal one dollar.

Assume That the Exchange Rate Moves from $1 = €1