The arrows in Figures A–D represent possible movements of the exchange rate (euros per U.S. dollar) and the quantity of U.S. dollars buyers are willing and able to buy. Use these figures to answer the following questions.
-A depreciation of the euro against the U.S.dollar is represented by Figure ________,and a depreciation of the U.S.dollar against the euro is represented by Figure ________.

Question

The arrows in Figures A–D represent possible movements of the exchange rate (euros per U.S. dollar) and the quantity of U.S. dollars buyers are willing and able to buy. Use these figures to answer the following questions. 
-A depreciation of the euro against the U.S.dollar is represented by Figure ________,and a depreciation of the U.S.dollar against the euro is represented by Figure ________.

Quizplus · Accepted Answer

A depreciation of the euro against the U.S. dollar is represented by Figure C, where the exchange rate has increased from 1 euro per dollar to 1.3 euros per dollar. This means it takes more euros to buy a dollar, indicating a depreciation of the euro. 
A depreciation of the U.S. dollar against the euro is represented by Figure A, where the exchange rate has decreased from 1 euro per dollar to 0.8 euros per dollar. This means it takes more dollars to buy a euro, indicating a depreciation of the dollar. Therefore, the correct choice is B: C represents a depreciation of the euro and A represents a depreciation of the dollar.

The Arrows in Figures A–D Represent Possible Movements of the Exchange