Question

Suppose that last month, 1.00 U.S. dollar could purchase 0.75 euros, but this month it can purchase only 0.70 euros.
What do we say is happening to the value of the U.S. dollar and the euro?

Answer 1

Answer:

The value of dollar has depreciated while that of euro has appreciated.

Explanation:

The exchange rate for a currency is the rate at which it can be exchanged for another currency. It is the rate at which one currency can purchase another currency. If in the previous month the US dollar can purchase 0.75 euros then its exchange rate is $1 = 0.75 euros.  

If this month a dollar can purchase only 0.70 euros, it implies that the euro is becoming expensive and the value of US dollars is decreasing.  

In other words, we can say that US dollars are depreciating and euros is appreciating.