In July 2016, a British pound could buy $2. By October 2016, a pound could buy $1.55. Over the four months, the
A) pound depreciated against the dollar.
B) the real exchange rate did not change.
C) pound appreciated against the dollar.
D) the U.S. inflation rate increased.

Question

Quizplus · Accepted Answer

The pound depreciated against the dollar because it went from being able to buy $2 to only being able to buy $1.55, indicating a loss in value relative to the dollar.

In July 2016, a British Pound Could Buy $2