Which one of the following statements is correct assuming that exchange rates are quoted as units of foreign currency per dollar?

Question

Quizplus · Accepted Answer

If exchange rates are quoted as units of foreign currency per dollar, when a foreign currency appreciates in value, it strengthens relative to the dollar. Therefore, option C is correct. Option A is incorrect because the exchange rate and the value of the dollar move in the same direction. Option B is incorrect because the exchange rate rises when the U.S. inflation rate is lower than the foreign country's. Option D is incorrect because the exchange rate rises as the dollar strengthens. Option E is incorrect because the exchange rate is affected by differences in the inflation rates of the two countries.

Which One of the Following Statements Is Correct Assuming That