For each of the cases below, indicate what the numerical change means and state whether the euro has appreciated or depreciated.a. The spot exchange rate changes from 450 euros per Mexican peso to 440 euros per Mexican peso.b. The spot exchange rate changes from 0.011 Mexican pesos per euro to 0.006 Mexican pesos per euro.c. The spot exchange rate changes from 1.48 euros per British pound to 1.51 euros per British pound.d. The spot exchange rate changes from 0.73 British pounds per euro to 0.75 British pounds per euro.
What will be an ideal response?
POSSIBLE RESPONSE:
a. The value of the Mexican peso decreases, so the euro has appreciated.
b. The value of the euro decreases, so the euro has depreciated.
c. The value of the pound increases, so the euro has depreciated.
d. The value of the euro increases, so the euro has appreciated.
You might also like to view...
A flexible exchange rate is an exchange rate whose value:
A. varies according to supply and demand for the currency in the foreign exchange market. B. reflects the comparative advantage of the home country versus other foreign countries. C. is established annually by the International Monetary Fund. D. is determined by the law of one price.
In the United States, most workers
A. work for government of some sort. B. produce raw materials for manufacturing. C. work in agriculture and farming. D. produce services rather than goods.
All the following statements about the Federal Reserve are true EXCEPT the fact that it ________
A) is a public authority B) regulates a nation's depository institutions C) accepts checking deposits from the nation's residents D) controls the quantity of money
A common response to stop a depreciation of a currency is to use contractionary monetary policy, which could lead to a recession
Indicate whether the statement is true or false