The Arrows in Figures A-D Represent Possible Movements of the Exchange

question 130

Multiple Choice

The arrows in Figures A-D represent possible movements of the exchange rate (euros per U.S. dollar) and the quantity of U.S. dollars buyers are willing and able to buy. Use these figures to answer the questions that follow.

-A deprecation of the euro against the U.S.dollar is represented by Figure ________,and a depreciation of the U.S.dollar against the euro is represented by Figure ________.

• A) A; C
• B) C; A
• C) B; D
• D) D; B
• E) A; D

---

Definitions:

Income Effect

The income effect describes how a change in a consumer's income affects their purchasing power and consumption choices.

Substitution Effect

The economic concept describing how consumers react to a change in price of a good by substituting it with another good, holding their level of satisfaction constant.

Delphiniums

Are a genus of flowering plants known for their tall spikes of colorful flowers, commonly used in gardens and floral arrangements.

Perfect Substitutes

Goods or services that can be used in place of one another with no loss of utility or satisfaction.