6.2: Exchange Rates

Question 1

Exchange Rate

Answer 1

price of one’s currency relative t another currency

Question 2

For all national transaction there are different what?

Answer 2

currency

Question 3

What currency do countries must pay to another country in order to receive items?

Answer 3

In the currency of the country, you’re getting stuff in.

Question 4

The Exchange Rate is dependent on what?

Answer 4

Which currency your converting.

$3=2 Euros

The price of 1 US dollar relative to Euros is .66 Euros
2/3

The price of 1 Euro relative to US dollar is
$1.5 US dollars

3/2

Question 5

What happens is you need more dollars to buy one Euro (the price for a euro increases)?

Answer 5

The US Dollar depreciates

Question 6

Depreciation

Answer 6

The loss of value of a country’s currency with respects of a foreign country’s currency

More units of a dollars are needed to buy another country’s single unit

Question 7

Appreciation

Answer 7

The increase of a country’s currency in respect to foreign county’s currency

Fewer units of dollars used to buy a single unit of a country’s currency

Question 8

When the US dollar appreciates again the Euro, which of the filling is most likely to happen?
A) European firms will pay less from buying US equipment
B) European products will become more expensive for US consumers
C) US tourists will pay less dollars for European trips
D) European trade deficit will decrease
E) US trade deficit will increase

Answer 8

C