Consider an Apple iPod that costs $240. (LO2) a. If the eurodollar exchange rate is 1 euro

Question:

Consider an Apple iPod that costs $240. (LO2)

a. If the euro–dollar exchange rate is 1 euro per dollar, so that it costs a European 1 euro to buy a dollar, how much will the iPod cost in France?

b. If the euro–dollar exchange rate falls to 0.8 euro per dollar, how much will the iPod cost in France?

c. Consequently, what will happen to French purchases of iPods and the amount of dollars demanded in the foreign exchange market as the euro–dollar exchange rate falls?

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