If the Exchange Rate Changes from 1 Euro Per U

question 109

Multiple Choice

If the exchange rate changes from 1 euro per U.S. dollar to 1.2 euros per U.S. dollar, the Euro has

• A) appreciated, since its value has increased.
• B) appreciated, since the price of U.S. dollars has increased.
• C) appreciated, making U.S. goods cheaper in Euros.
• D) depreciated, since its value has declined.
• E) depreciated, since its value has increased.

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Definitions:

Reserve Ratio

The reserve ratio is the fraction of depositors' balances banks must have on hand as cash, a regulatory requirement set by central banks.

National Charters

Official permissions granted by a government allowing the creation or operation of national banks and defining their powers.

Banking

The business conducted or services offered by a bank, such as lending, receiving deposits, and managing financial transactions.

Traveler's Checks

Traveler's Checks are preprinted, fixed-amount checks designed to allow the person signing them to make payments or exchange them for cash while traveling, offering a secure alternative to carrying cash.