Explanation:
If EUR/USD rises from 1.30 to 1.43, the euro strengthens and the U.S. dollar weakens. As a result, U.S.-priced goods become cheaper in euro terms for European buyers, which benefits U.S. exporters. Therefore, A is true.
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Question-191.2. Since the start of 2011, the spot foreign currency exchange rate between the U.S. dollar and Euro has moved from about EUR/USD $1.30 to about EUR/USD $1.43 (EUR/USD = base/quoted currencies). Which of the following is TRUE?
A
American goods are cheaper to European buyers (benefiting US exporters)
B
American goods are more expensive to European buyers (hurting US exporters)
C
European manufacturers benefit in American markets as their goods become cheaper to American buyers
D
Interest rate parity and arbitrage tend to approximately nullify the impact of the currency exchange rates on even un-hedged importers and exporters