Scenario 1

European Fashion is becoming more popular in the US.

a. Show and explain how this change will affect the international value of the United States dollar and the Euro. (Make sure you use the concepts of supply and demand in your explanation. You will draw 2 graphs as a part of your answer to this question)

b. Explain how the changing value of the dollar you determined above will affect United States exports and imports. (Make sure you use the concepts of the cost of foreign and domestic goods in your explanation. Notice that this question is not asking what will happen to exports and imports based on the original scenario, but what will happen now that the Dollar and Euro have changed value in question 1a)