When the exchange rate between pounds and dollars moves from $2 = 1 pound to $1 = 1 pound, we say that the dollar has
A) depreciated.
B) appreciated.
C) inﬂated.
D) deﬂated.

Question

Quizplus · Accepted Answer

When the exchange rate changes from $2 = 1 pound to $1 = 1 pound, it means that fewer dollars are now needed to buy the same amount of pounds. This indicates that the value of the dollar relative to the pound has increased, or in other words, the dollar has appreciated.

When the Exchange Rate Between Pounds and Dollars Moves from $2