If the exchange rate changes from 40 Thai baht per dollar to 25 Thai baht per dollar, what has happened to the dollar?
A) It has appreciated and so buys more Thai goods.
B) It has appreciated and so buys fewer Thai goods.
C) It has depreciated and so buys more Thai goods.
D) It has depreciated and so buys fewer Thai goods.

Question

Quizplus · Accepted Answer

The dollar has depreciated and so buys fewer Thai goods. This is because now it takes more dollars to buy the same amount of Thai baht. The exchange rate has decreased from 40 baht per dollar to 25 baht per dollar, which means the dollar is worth less in relation to the Thai baht.

If the Exchange Rate Changes from 40 Thai Baht Per