Asked by Kennedy Bulman on Jul 24, 2024
Verified
When the exchange rate between pounds and dollars moves from $2 = 1 pound to $1 = 1 pound, we say that the dollar has
A) depreciated.
B) appreciated.
C) inflated.
D) deflated.
Depreciated
A decrease in the value of an asset over time due to wear and tear, age, or obsolescence.
Appreciated
In financial terms, it means an increase in the value of an asset or currency.
Exchange Rate
An exchange rate is the value of one currency for the purpose of conversion to another currency.
- Achieve an understanding of the mechanisms behind currency appreciation and depreciation.
Verified Answer
LP
Lewis Patrick-Balamaga Year 7Jul 27, 2024
Final Answer :
B
Explanation :
When the exchange rate changes from $2 = 1 pound to $1 = 1 pound, it means that fewer dollars are needed to buy the same amount of pounds. This indicates that the value of the dollar relative to the pound has increased, which is referred to as appreciation of the dollar.
Learning Objectives
- Achieve an understanding of the mechanisms behind currency appreciation and depreciation.