Question

If you are vacationing in France and the dollar depreciates relative to the euro, then Group of answer choices the dollar buys fewer euros. It will take fewer dollars to buy a good that costs 50 euros. the dollar buys more euros. It will take fewer dollars to buy a good that costs 50 euros. the dollar buys more euros. It will take more dollars to buy a good that costs 50 euros. the dollar buys fewer euros. It will take more dollars to buy a good that costs 50 euros. None of the options is correct.

Answer 1

It will take more dollars to buy a good that costs 50 euros. the dollar buys fewer euros.

Step-by-step explanation:

Currency depreciation is the loss of value of a country's currency with respect to one or more foreign reference currencies. This is caused by:

1. Easy monetary policies

2. Inflation. Etc

If you are vacationing in France and the dollar depreciates relative to the euro, then It will take more dollars to buy a good that costs 50 euros. the dollar buys fewer euros.

Answer 2

Answer: the dollar buys fewer euros. It will take more dollars to buy a good that costs 50 euros.

Step-by-step explanation:

When a Currency depreciates against another currency, it means that the depreciating currency can only buy FEWER of the currency it depreciated against because that one is now stronger.

In terms of transactions think of it as the currency being depreciated against becoming more expensive so more of the other currency is needed to buy it.

In this example, the Dollar depreciated against the Euro meaning that by the above definition, the Dollar can only purchase less of the Euro. It also means that for a price on Euro which in this case is €50, more dollars will be needed to buy the good because it just became more expensive for the dollar to buy.