Course: ECO 110

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Unit 11 Assignment »

Unit 11 Assignment

Unit 11 Assignment

1. Draw a graph that shows the exchange rate of the euro to the dollar.  On the horizontal axis put the quantity of US$ and on the vertical axis is the price of euros per dollar.  Then draw on the graph a demand curve which is the demand for dollars and a supply curve which is the supply of dollars.
2. Incomes in Europe as a whole have decreased in the last few years and they have had less desire and less income to buy US goods.  If they are buying less US goods what happens to the international demand for dollars to pay for those goods?  Show on graph.
3. Are there now more or less euros per dollar?
4. As a result of your answer in 3, what will happen to the price in euros of goods that the Europeans buy from the US?  Will they want to subsequently buy more or less US goods?