Scenario: Exchange Rates The value of a euro goes from US$1.25 to US$1.50. The exchange rate for the dollar has changed from:

Question

Quizplus · Accepted Answer

When the value of the euro increases from US$1.25 to US$1.50, it means that you now need more dollars to buy a single euro. Initially, 1 euro was equal to US$1.25, which means 1 dollar was equal to 1/1.25 = €0.80. After the increase, 1 euro equals US$1.50, meaning 1 dollar is now equal to 1/1.50 = €0.67. Therefore, the exchange rate for the dollar has decreased from €0.80 to €0.67.

Scenario: Exchange Rates the Value of a Euro Goes from US$1.25