If the C$ weakens by 1% relative to the euro (C$1.00 = €0.64491), what will be the new value for the euro per C$1.00?

Question

Quizplus · Accepted Answer

If the C$ weakens by 1% relative to the euro, the value of the euro per C$ increases. The original value is €0.64491 per C$. A 1% increase of this value is 0.64491 * 0.01 = 0.0064491. Adding this to the original value gives 0.64491 + 0.0064491 = 0.6513591, which rounds to 0.65136, but since this option is not correct based on the weakening described, the misunderstanding seems to be in the direction of the calculation. The correct interpretation should be that the euro's value in terms of C$ would decrease, making the euro stronger or the C$ weaker. However, given the options and the scenario, the correct calculation should involve finding the value that represents a 1% decrease in the euro's value relative to the C$, which is not directly provided in the options. The correct approach is to understand that if the C$ weakens, the amount of euros you get for each C$ decreases. The mistake in the explanation pointed towards an increase, which was incorrect. The correct answer, based on the options provided and the correct understanding of currency weakening, should reflect the euro's value increasing relative to the C$, but the calculation provided does not match the options given, indicating a misunderstanding in the calculation process. The correct process involves understanding the reciprocal nature of currency exchange rates when one weakens relative to another. Given the misunderstanding in the explanation, the correct answer should reflect the new value of the euro per C$ after a 1% weakening of the C$, but the calculation provided was incorrect. The correct answer, C, is chosen based on the premise of the question rather than the calculation provided.

If the C$ Weakens by 1% Relative to the Euro