If the goods' money prices do NOT change, a depreciation of the dollar against the pound
A) makes British sweaters cheaper in terms of American jeans.
B) makes British sweaters more expensive in terms of American jeans.
C) makes American jeans more expensive in terms of British sweaters.
D) doesn't change the relative price of sweaters and jeans.
E) makes British jeans more expensive in Britain.

Question

Quizplus · Accepted Answer

A depreciation of the dollar means it takes more dollars to buy the same amount of pounds. If the money prices of goods do not change, British sweaters become more expensive in terms of American jeans because more dollars are needed to buy the same amount of pounds to purchase the sweaters.

If the Goods' Money Prices Do NOT Change, a Depreciation