2. The U.S. foreign assets are 67 percent of the U.S. GDP, and the U.S. foreign liabilities are 90 percent of the U.S. GDP. Moreover, 68 percent of U.S. foreign assets are denominated in foreign currencies, while almost all liabilities to foreigners are denominated in U.S. dollars. In this question, assume that all U.S. liability to foreigners are denominated in U.S. dollars. Suppose that there is a 9 percent appreciation of the dollar. Will the U.S. net foreign asset position increase or decrease? By how much (as a percent of U.S. GDP)? Show your work.

3. In 2017, prices increase by 1.54% in Europe (in euros) and 2.1% in the US (in dollars). According to PPP, the euro should appreciate or depreciate? By how much?