Question

With the start of the subprime financial crisis in August 2007, the dollar ________ in value against the euro as the Fed lowered interest rates. By December of 2008, with the financial crisis spreading throughout Europe, foreign central banks cut their interest rates, leading to a ________ in the value of the dollar relative to the euro g.

Answer 1

• depreciated
• appreciation

Step-by-step explanation:

During 2007 the dollar-euro currency exchange was on average 1.37 dollars per euro. The value of the euro hit a maximum of 1.47 dollars per euro at the end of 2008. At that moment the financial crisis reached Europe, and European Central Bank lowered its interest rate. Since the ECB continued with its low interest rate the dollar has appreciated a lot, a euro is now worth only 1.11 dollars (the dollar has appreciated 32% against the euro).