When the Exchange Rate Between the U

question 221

Multiple Choice

When the exchange rate between the U.S.dollar and the euro changes from 1.30 euros per dollar to 1.00 euro per dollar the dollar has ________ and European goods have become ________ to people in the United States so that quantity of U.S.dollars supplied ________.

• A) depreciated; cheaper; increases
• B) depreciated; more expensive; decreases
• C) depreciated; cheaper; decreases
• D) appreciated; more expensive; decreases
• E) appreciated; cheaper; increases

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Definitions:

Less Elastic

Describes a situation in which the demand or supply for a good or service is less responsive to changes in price.

Elasticity

An economic measure of the sensitivity of demand or supply to changes in price, income, or other factors, affecting the quantity consumed or supplied.

Elasticity of Demand

A measure of how much the quantity demanded of a good responds to a change in the price of that good.

Total Revenue

The total income generated by a firm from the sale of its products or services before any costs are deducted.