Question

Assume that the exchange rate moves from $1 = €1.2 to $1 = €0.97. This change in exchange rate indicates that:

the euro has depreciated in value.

the price of a holiday in Europe has become less expensive for U.S. residents.

the U.S. dollar price of European chocolate has fallen.

the U.S. dollar has appreciated in value.

the euro has appreciated in value.

Answer 1

The appreciation of the currency is the increase in the value of the currency with another currency, like wise the depreciation is the loss of currency value with another currency. The currency appreciation and depreciation has immediate effect on the international trade so does the business.

The given is an example of the depreciation for the U.S dollar and appreciation for the Euro. Earlier $1 is equal to 1.2 euros, that is the dollar has greater value than euro, now the exchange rate has decreased now one U.S dollar is equal to 0.97 euros, this means that the U.S dollar has depreciated and the Euro has appreciated.

Ans: The euro has appreciated in value.