Asked by Jonah Marukot on May 05, 2024
Verified
If you are vacationing in Spain and the dollar depreciates relative to the euro, then the dollar buys
A) more euros.It will take fewer dollars to buy a good that costs 50 euros.
B) more euros.It will take more dollars to buy a good that costs 50 euros.
C) fewer euros.It will take fewer dollars to buy a good that costs 50 euros.
D) fewer euros.It will take more dollars to buy a good that costs 50 euros.
Depreciates
The decrease in value of an asset over time or in response to changes in market conditions.
Euro
The Euro is the official currency of the Eurozone, which consists of 19 of the 27 European Union member states, serving as one of the world's major currencies.
- Familiarize yourself with the theories of nominal and real exchange rates.
- Analyze the effects of changes in currency value on the global trading system.
Verified Answer
NK
Nyameko KhalifaMay 08, 2024
Final Answer :
D
Explanation :
When the dollar depreciates relative to the euro, each dollar is worth fewer euros, meaning it will take more dollars to buy the same amount of goods or services priced in euros.
Learning Objectives
- Familiarize yourself with the theories of nominal and real exchange rates.
- Analyze the effects of changes in currency value on the global trading system.