It is customary to express changes in the exchange rates of two currencies over time, as:
A) the loss of purchasing power of one currency divided by the loss of purchasing power of the other currency.
B) the percentage change expressed as an appreciation or depreciation of one against the other.
C) a ratio of the absolute values (without signs).
D) a ratio of the price of gold in each nation.

Question

Quizplus · Accepted Answer

Expressing changes in exchange rates as a percentage change of one currency against another is the most common and practical way. It allows one to understand the magnitude and direction of the change, whether it is an appreciation (increase in value) or depreciation (decrease in value). It is also easier to compare changes across different exchange rates. Options A, C, and D are not commonly used in expressing changes in exchange rates.

It Is Customary to Express Changes in the Exchange Rates