Suppose That the United States Trades Only with Germany and Japan

Multiple Choice

Suppose that the United States trades only with Germany and Japan. Suppose also that in 2005 the spot rates were 0.70 euro = $1 peso and ¥110 = $1, and that in 2010 the spot rates were 0.84 euro = $1 and ¥99 = $1 peso. If United States trade is 50 percent With Germany and 50 percent with Japan, calculation of the effective exchange rate for The United States indicates that the dollar

A) appreciated from 2005 to 2010.
B) did not change in value from 2005 to 2010.
C) depreciated from 2005 to 2010.
D) appreciated, did not change in value, or depreciated from 2005 to 2010 - cannot be Determined without more information.