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Imagine That the Dollar Appreciates 10% Against the Euro and Depreciates

Question 29

Multiple Choice

Imagine that the dollar appreciates 10% against the Euro and depreciates 10% against the Yen.If dollar trade weights are 75% against the Euro and 25% against the Yen,what has happened to the dollar effective exchange rate?


A) It is unchanged
B) It has appreciated by about 5%
C) It has appreciated by about 10%
D) It has depreciated by about 5%
E) It has depreciated by about 10%

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