Suppose the pound/dollar exchange rate on Monday is 1.5 and on the following Friday is 1.6.

a. Briefly discuss what has happened to the price of the domestic currency in terms of the foreign currency (Since we live in the U.S., our domestic currency is U.S. dollars).

b. Has the value of the dollar increased or decreased during the week? What has happened to the purchasing power of the dollar in terms of the pound? Briefly explain.

c. Has the dollar appreciated or depreciated during the week?

Answer rating: 100% (QA)

With a change in the exchange from 15 to 16 the price of the domes... View the full answer