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1. As we will discuss in some detail in C_hapter_21, in 1999 the European Union introduced a common currency known as the euro. Take the
1. As we will discuss in some detail in C_hapter_21, in 1999 the European Union introduced a common currency known as the euro. Take the European Union as your home country and the United States as your foreign country. In this case, 6 = euros/dollar. Set up the equivalent of LigiLmS to show the determination of e. Next, use three additional diagrams to show the impacts on e of the following changes: a fall in the euro interest rate; a fall in the dollar interest rate; and a fall in the expected value of the exchange rate (6"). In each case, explain the intuition ofyour result. rigm m .-'u: nuts-base. \"mm: pm marker Excess SUDPIY 27 E: supply 0! pesos 1/91 .............. *' ______________________________ 1 1/6 I 2 4) Excess demand 5;: demand for pesos 3F 27 E
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