Multiple Choice

16. Reuters reported onJanuary 24, 2004: \"The United States is sucking in imports from all over the world, driving up the US. current account decit as Americans borrow heavily. This, combined with the huge U.S. budget decit, is forcing down the value of the US. dollar in currency markets. The euro is bearing the brunt of the dollar's fall, rising 20 percent last year.\" (Stella Dawson, \"Global Business Leaders Fret About Growth,\" Reuters, Saturday, January 24, 2004). It appears that a value change of 20% or more within one year has been a frequent occurrence in the foreign exchange market If the euro appreciates 20% against the dollar, which of the following is TRUE for a Eurozone exporter to the US? a. If the exporter adopts a pricing to market strategy, its euro prots will go up. b. If the exporter adopts a complete pass-through strategy, its sales in the US will go up. c. If the price elasticity of demand for its product in the US is 3, and the exporter keeps its euro price unchanged, its sales volume in the US. will decrease by 60%. d. If the price elasticity of demand for its product in the US. is 3, and the exporter follow complete exchange rate pass-through, its sales volume will increase by 60%