If ¥/€ falls,

Question

If ¥/€ falls,

BlackTom AI · Accepted Answer

A fall in ¥/€ means one euro now buys fewer units of the currency denoted by ¥ (yen or yuan), so the euro has depreciated relative to ¥.

1) Relevant concepts
- An exchange rate written as ¥/€ is the price of one euro expressed in units of ¥ (a direct quote in ¥). 
- A decrease in that exchange rate means the foreign currency (euro) costs less in domestic currency (¥). 
- "Depreciation" means a currency loses value relative to another; "appreciation" means it gains value.

2) Step-by-step reasoning
- Start with a numeric example to make direction clear. Suppose initially ¥/€ = 150. That means 1€ = 150¥.
- If ¥/€ falls to 120, then 1€ = 120¥. The euro now buys fewer yen than before (150 → 120).
- Because the euro’s purchasing power in terms of ¥ has declined, the euro has depreciated relative to ¥.

3) Calculations / intermediate steps
- Initial: 1€ = 150¥
- After change: 1€ = 120¥
- Change in value of euro in ¥ terms = (120 − 150)/150 = −30/150 = −0.20 = −20%
- The euro lost 20% of its value in ¥ terms (a depreciation).

4) Why the correct answer is correct
- The expression ¥/€ falling directly measures a decline in the euro price in ¥ units, which is the textbook indicator of euro depreciation (or equivalently ¥ appreciation). The option "the euro has depreciated" matches this interpretation.

5) Why the other option is incorrect
- "The yuan had depreciated" (or more generally "¥ had depreciated") would correspond to ¥/€ rising (more ¥ per €). If ¥/€ rises, one euro buys more ¥, indicating that ¥ lost value (depreciated). But the problem states ¥/€ falls, so this is the opposite.

6) Conclusion
- Therefore the correct conclusion is that the euro has depreciated, which matches the provided answer.

If ¥/€ falls,Single choice

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