Suppose the exchange rate of the U.S. dollar was 1.50 British pounds = $1.00 on Wednesday, and on Monday the exchange rate was $0.75 = 1.00 British pound. Which of the following best explains what has happened between Wednesday and Monday?
A) The U.S. dollar appreciated against the British pound.
B) The British pound appreciated against the U.S. dollar.
C) The U.S. dollar depreciated against the British pound.
D) Both answers B and C are correct.

Question

Quizplus · Accepted Answer

On Wednesday, one U.S. dollar could buy 1.50 British pounds, while on Monday it could only buy 1.00 British pound. This means that the U.S. dollar has depreciated against the British pound, making option C correct. However, the exchange rate has also increased from 0.75 to 1.00 British pounds per dollar, which means that the British pound has appreciated against the U.S. dollar, making option B also correct. Therefore, the best answer is D.

Suppose the Exchange Rate of the U