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Macroeconomics

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Moderate

European Central Bank

MACRO-WZ48J1

When the European Central Bank (ECB) lowers interest rates across the eurozone, other things the same, which of the following captures the change in exchange rate between the dollar and the euro?

A

The dollar appreciates, the equilibrium quantity of dollar traded rises.

B

The dollar depreciates, the equilibrium quantity of dollar traded rises.

C

The dollar appreciates, the equilibrium quantity of dollar traded is undetermined.

D

The dollar appreciates, the equilibrium quantity of dollar traded falls.