If the initial exchange rate is $2 per pound, and then rises to $3 per pound, we would say that the dollar has:
A) appreciated against the dollar.
B) depreciated against the dollar.
C) appreciated against the pound.
D) depreciated against the pound.
E) the value of the pound has not changed.

Question

Quizplus · Accepted Answer

The dollar has depreciated against the pound because it now takes more dollars ($3 instead of $2) to buy one pound, indicating a loss in value of the dollar relative to the pound.

If the Initial Exchange Rate Is $2 Per Pound, and Then