Question

Suppose you go to Paris and find that you can buy Euro for Dollar at a...

Suppose you go to Paris and find that you can buy Euro for Dollar at a cheaper rate today than yesterday. This means

Dollar has appreciated

Euro has depreciated

Dollar has become strong

all of the above
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Answer #1

I go to Paris and find out that I can buy more Euro per dollar today then yesterday. Meaning yesterday I was able to buy 1 Euro for 1 dollar. But now I can buy 3 Euros for 1 dollar.

It means dollar value has appreciated as earlier for 1 USD I was only getting 1 Euro. But today for 1 USD I am getting more Euros.

Thus all the options are correct. Fourth option is the answer.

As dollar appreciates, by just giving 1 dollar, I get 3 Euros.

Euro depreciates - Earlier I was only getting 1 Euro for 1 USD. which means the values were at par. But now I am getting 3 Euros for 1 USD. Thus Euro value has declined where by just giving 0.33 USD (1 / 3) . I am getting 1 Euro.

Dollar has become stronger means the same thing that dollar has appreciated.

Thus all of the above options are correct.

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