Question

Suppose last year $1 was exchanged for 1.25 Euros. Today $1 can be exchanged for 1.15 Euros.

Which of the following is/are true? May be more than one but be careful, wrong answers will reduce your score.

Only consider the F/X considerations...

Select one:

a. Now is a good time for US residents to vacation in Europe

b. French exporters to the US will be happier today vs a year ago

c. US Exporters to Europe will be happier today vs a year ago

d. The Euro has gotten stronger vs the $$

Answer 1

In the given, situation USD has been depriciated and Euro has been appreciated as today 1 $ = 1.15 Euro while earlier the same $ was 1.25 Euro.

Option C and D are correct.

US Exporters to Europe will be happier today vs a year ago. US exporter will be happy as they will be getting more Dollars now compared to what they would have gotten on year ago. Also the Euro has appretiated.

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