the U.S. dollar appreciates against the euro by 25%, the euro will depreciate against the U.S. dollar

Question

Quizplus · Accepted Answer

If the U.S. dollar appreciates by 25% against the euro, it means that one U.S. dollar can now buy 25% more euros than before. This implies that the exchange rate between the two currencies has changed. In other words, the U.S. dollar has become stronger and the euro has become weaker. If the U.S. dollar is now able to buy more euros, it means that the euro has depreciated against the USD. Therefore, the correct answer is B) 20% because if the USD appreciates by 25%, it means the EUR depreciates by 20% [(1/1.25)-1 = 0.20 or 20%].

The US Dollar Appreciates Against the Euro by 25%, the Euro