If a euro costs $1.25 today, and it costs $1.50 tomorrow, what has happened to the dollar-euro exchange rate?
A) Both the dollar and euro have depreciated.
B) The dollar has appreciated and the euro has depreciated.
C) The dollar has depreciated and the euro has appreciated.
D) Both the dollar and euro have appreciated.

Question

Quizplus · Accepted Answer

The dollar has depreciated because it now takes more dollars to buy a single euro, indicating a loss in value of the dollar relative to the euro. Conversely, the euro has appreciated because it now has more value in terms of dollars.

If a Euro Costs $1