Question 29 Multiple Choice Worth 3 points)
(05.06 MC)
Elaine owns a small grocery store in the United States. In the store, she sells specialty foods from Europe. Elaine hears a news report saying that the value of the dollar has fallen compared to the euro.
Based on the scenario, which statement is true?
A. The goods to supply Elaine's store will cost her less.
B. The goods to supply Elaine's store will cost her more.
C. Elaine will pay more for the goods that she exports.
D. Elaine will pay less for the goods that she exports.

If the value of dollar falls in comparsion to euro, goods supplied to Elaine's store would cost her more.

Explanation:

Since Elain specialises in speciality foods from Europe she must have to import it. Hence, she must have been paying in dollars which would later be converted in euro at the appropriate conversion rate.

Now, if the value of the dollar falls when compared to the euro, it means that for the same out of goods Elaine must have to pay more dollars(since dollar value has fallen). Hence the goods that are supplied in her store would cost her more than before.