Question

As a result of a depreciation of the dollar relative to the Euro, the equilibrium Euro price of US imports will

Answer 1

fall

Step-by-step explanation:

Depreciation is the decline in the value of a currency. When the dollar declines in value relative to the Euro, it means that the value of the dollar has declined relative to the Euro.

For example, let us assume that the exchange rate at the beginning and the end of the year are :

£1 - $10

£1 - $20

respectively

This shows that the dollar has depreciated and the euro has appreciated.

As a result, it would be cheaper for countries whose currency is the Euro to buy goods from a country whose currency is the dollar. So, the equilibrium Euro price of US imports will fall.