Georgia Ferguson lives in Atlanta, Georgia. She is in the market for a new car. She has
Question:
Georgia Ferguson lives in Atlanta, Georgia. She is in the market for a new car. She has decided to get either a Ford Mustang or a BMW 3-series coupe. The Mustang is made in Detroit, Michigan; the BMW 3-series coupe is made in Frankfurt, Germany. Georgia is concerned about the exchange rate. A BMW 3-series coupe costs 35,000 euro (EUR) and a Mustang costs 35,000 dollars (USD). Complete the following table to help Georgia decide which car to purchase.
Exchange Rate | Cost of Mustang in USD | Cost of 3-series Coupe in USD |
1 EUR = 1.08 USD | ||
1 EUR = 1.07 USD | ||
1 EUR = 1.06 USD | ||
1 EUR = 1.05 USD |
Georgia has $37,500 to spend on a car (not including the tax, tag, and Qtle). Under which exchange rates can she afford the BMW?
If the United States were to implement a $500 tariff on cars from Germany (i.e. prices for cars from Germany would rise by $500 USD), what would it do to the price of the two cars, using the same exchange rates?
Exchange Rate | Cost of Mustang in USD | Cost of 3-series Coupe in USD |
1 EUR = 1.08 USD | ||
1 EUR = 1.07 USD | ||
1 EUR = 1.06 USD | ||
1 EUR = 1.05 USD |
Does the tariff change under which exchange rates Georgia can afford to purchase the BMW? Explain
Macroeconomics Principles Applications And Tools
ISBN: 9780134089034
7th Edition
Authors: Arthur O Sullivan, Steven M. Sheffrin, Stephen J. Perez