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Question
Statistics
Posted 8 months ago
The international quidditch tournament is being held in Ghana. The currency of Ghana is the cedi.
If the cedi has depreciated, what does that mean for tourists heading to Ghana to watch the tournament?
Choose 1 answer:
(A) The exchange rate of the cedi has increased
(B) It will take less of their currency to buy the cedi
(c) The exchange rate of other currencies relative to the cedi has decreased
(D) Ghanian goods will be relatively more expensive to tourists
(E) Ghana's price level has decreased
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Answer from Sia
Posted 8 months ago
Solution by Steps
step 1
Understand the concept of currency depreciation: Currency depreciation means that the value of the currency has decreased relative to other currencies
step 2
Analyze the impact on exchange rates: When a currency depreciates, it costs less in terms of foreign currencies. This means that the exchange rate, in terms of how much foreign currency can be exchanged for the same amount of the local currency, has increased
step 3
Determine the effect on tourists: For tourists, a depreciated local currency means that they can exchange their foreign currency for more local currency than before, making the cost of spending in the local economy effectively cheaper
Answer
B
Key Concept
Currency Depreciation and Exchange Rates
Explanation
When a currency depreciates, it loses value compared to other currencies, which means tourists can exchange more of the depreciated currency with the same amount of their own currency.
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