Economics-Open-05-ID

If the nominal exchange rate between the U.S. dollar and the British pound changes from $1.30 per pound to $1.20 per pound, the U.S. dollar has ____________.

• appreciated, because one dollar now buys more pounds than before
• appreciated, because $1.20 is a lower number than $1.30
• become more competitive, because American goods are now cheaper for British consumers
• increased its transactional cost for travelers planning a vacation to London