Question

a) The value of the Australian dollar (A$) today is $0.73. Yesterday, the value of the Australian dollar was $0.69. The Australian dollar ____ by ____%.

a. depreciated; 5.80

b. depreciated; 4.00

c. appreciated; 5.80

d. appreciated; 4.00

B) If the dollar appreciates by 200% against the Turkish Lira, please obtain the Lira’s depreciation against the dollar.

Answer 1

a)

Earlier, $0.69 was required to buy 1 A$ and now $0.73 is required. Therefore, A$ is Appreciated.

Appreciation = (0.73-0.69)/0.69 = 0.04/0.69 = 0.05797 = 5.8%

Therefore, Appreciated; 5.8%

b)

Lets assume that earlier, exchange rate was 1 Turkish Lira/$. Therefore, now, after 200% Appreciation, it will be 3 Turkish Lira/$.

Therefore, earlier, rate was 1 $/Turkish Lira, and now, after appreciation, rate is 1/3 = 0.3333 $/Turkish Lira.

Therefore, Depreciation Rate of Turkish Lira = (1-0.3333)/1 = 0.6667/1 = 66.67%