Subject - Economics:

Macroeconomics

MCQ - 220-4230

Question:

U.S. dollars and the European Union’s (EU’s) euro are exchanged in global currency markets. Which of the following is true?

If inflation is high in the EU and the price level in the United States is stable, the value of the dollar appreciates.
If the Fed decreases the money supply, the value of the dollar depreciates.
If EU consumers are less inclined to purchase American goods, the dollar appreciates.
If the Fed decreases the money supply, the value of the dollar depreciates.
If the European central bank expands the money supply, the euro appreciates.

Correct Answer: A

Explanation:

A difference in relative prices affects the exchange rate between the dollar and the euro. European customers will see U.S. goods as relatively less expensive and increase their purchases from the United States, thus appreciating the dollar and depreciating the euro.

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269 MCQ for effective preparation of the test of Macroeconomics of Economics section.

Read the MCQ statement: U.S. dollars and the European Union’s (EU’s) euro are exchanged in global currency markets. Which of the following is true? , keenly and apply the method you have learn through the video lessons for Macroeconomics to give the answer. Record your answer and check its correct answer and video explanation for MCQ No. 220-4230.

How to Answer

Solve the question for MCQ No. and decide which option (A through D/E) is the best choice to answer the MCQ, then click/tap the blue button to view the correct answer and it explanation.

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