Question

Larry, a United States citizen, is planning to take a European vacation. Most European nations use the euro as their currency. Just before his vacation, the value of the euro drops in international currency trading markets. How would this change in value affect Larry's upcoming trip?

Answer 1

Answer: A: The cost of things Larry purchases while in Europe would decrease.

Explanation: This is because it would take fewer dollars to buy euros than it would have before. Hope this helps!

Answer 2

One Euro, worth about $ 1.14. If Larry planned to take a holiday, say $ 5,000, it means he will bring 4392.32 euros, or when he arrives to Europe, he will be able to buy 4392.32 euros. If, in the meantime, the value of the euro drops against the dollar, it means that for the same amount of dollars, he will be able to buy a higher amount of the euro. In this case, more European money is available and Larry will be able to spend more, therefore he will have a good time in Europe.