Question

If there was an sudden change in exchange rates that resulted in fewer U.S. Dollars being required to buy a Euro, what could you expect?
A) Europeans to buy more American products.
B) the dollar to depreciate quicker than the Euro.
C) gold and silver would shift from Europe to the U.S.
D) the dollar to appreciate when compared to the Euro.

Answer 1

Answer;

D) the dollar to appreciate when compared to the Euro.

Explanation;

-Changes in exchange rates cause a change in the international relative prices of goods. One country's goods and services become more or less expensive relative to another's.

-Additionally; changes in exchange rates can cause a change in the international relative prices of assets. These fluctuations in wealth can then affect firms, governments, and individuals.

-An exchange rate crisis occurs when a currency experiences a sudden and large loss of value against another currency following a period in which the exchange rate had been fixed or relatively stable.

Answer 2

You could expect the dollar to appreciate when compared to the Euro. The answer to your question is D. I hope that this is the answer that you were looking for and it has helped you.