Changes in exchange rates are usually expressed in percentage terms. The percentage rate of appreciation for one currency will be close to the rate of depreciation for the other nation whenever:
A) the change in the rate is very small.
B) the exchange rates are very different in quantitative terms.
C) the change in the rate is very large.
D) one exchange rate is 50% more than the other one at the time of the change.

Question

Quizplus · Accepted Answer

When the change in the exchange rate is very small, the percentage rate of appreciation for one currency will be close to the rate of depreciation for the other nation. This is because small changes in exchange rates have relatively small impacts on trade and financial flows between the countries. Choices B, C, and D are incorrect as they do not accurately describe the relationship between exchange rate changes and percentage appreciation/depreciation.

Changes in Exchange Rates Are Usually Expressed in Percentage Terms