Answer (A) is correct . As the dollar price of the euro rises, the euro’s buying power increases (i.e., it can be exchanged for more dollars than before). Thus, the buying power of the dollar has decreased.
Answer (B) is incorrect because If the dollar price of the euro rises, the euro’s buying power increases (i.e., it can be exchanged for more dollars than before).
Answer (C) is incorrect because The euro’s value with respect to European goods is not affected by its value with respect to the dollar.
Answer (D) is incorrect because If the dollar price of the euro rises, the euro’s buying power increases, and the euro will buy more, not fewer, U.S. goods.
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