Question
1.Suppose a change in tastes for American and European goods causes Europe's demand for U.S. exports to increase and American's demand for imports from Europe
1.Suppose a change in tastes for American and European goods causes Europe's demand for U.S. exports to increase and American's demand for imports from Europe to decrease. Consequently, under a floating exchange rate system, we would expect
a.the U.S. dollar to appreciate.
b.the exchange rate to be higher in Paris than in New York.
c.the demand for Euros to increase in the foreign exchange market.
d.the supply curve for euros to shift left.
2.(continued from the question above) Shifts in demand away from European products and toward the U.S. products (caused by forces other than changes in the exchange rate) would reflect attempts to
a.buy both euros and dollars.
b.sell both euros and dollars.
c.sell Euros and buy dollars.
d.buy Euros and sell dollars.
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