5) When the exchange rate changes from 1.0 euros to the dollar to 1.2 euros to the dollar, the euro has A) appreciated; appreciated B) depreciated; appreciated C) appreciated; depreciated D) depreciated; depreciated

When the exchange rate changes from 1.0 euros to the dollar to 1.2 euros to the dollar, it means that it now takes more euros to buy one dollar. This indicates that the euro has depreciated in value compared to the dollar because it costs more euros to acquire the same amount of dollars. Hence, the correct answer would be B) depreciated; appreciated. In real-world currency exchange, this can impact travelers, importers, and exporters. If you're traveling from Europe to the U.S., a depreciated euro means your euros spend less, giving you less buying power in the States. Conversely, if you’re an exporter based in Europe, you might benefit from a weaker euro since your goods become cheaper for American buyers, potentially increasing your sales.