The Euro increased dramatically in value against the U.S dollar between 2000 and

Question

The Euro increased dramatically in value against the U.S dollar between 2000 and 2009. The result has been that A) U.S export are more competitive in Europe B) U.S goods cost more in Europe C) U.S travelers are finding it less expensive to travel in Europe D) Europpean exports to the U.S are more competitive The Euro increased dramatically in value against the U.S dollar between 2000 and 2009. The result has been that A) U.S export are more competitive in Europe B) U.S goods cost more in Europe C) U.S travelers are finding it less expensive to travel in Europe D) Europpean exports to the U.S are more competitive A) U.S export are more competitive in Europe B) U.S goods cost more in Europe C) U.S travelers are finding it less expensive to travel in Europe D) Europpean exports to the U.S are more competitive

Explanation / Answer

Solution:

A) U.S export are more competitive in Europe

It is because when the Euro increases in value againt U.S.dollar ,it means that the U.S dollar depreciates.So, when the U.S exchange rate depreciates U.S goods become cheaper compared to european goods which means that the european domestic consumers will prefer to buy U.S goods at a lower price than the domestically produced U.S goods. Hence, the U.S exports become more competitive in Europe raising its exports.

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