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The spot exchange rate between the dollar and the Euro is a floating, or flexible, rate. What are the effects of each of the following
The spot exchange rate between the dollar and the Euro is a floating, or flexible, rate. What are the effects of each of the following on this exchange rate? Illustrate what happens on the foreign market of euros. 1- There is a large increase in the demand for U.S. exports. 2- There is a large increase in the demand for E.U products. 3- There is a large inflow of capital from the EU to the USA. 4- Political uncertainties in Europe lead U.S. investors to pull out their investment from the Euro zone. 5- US investors will by euro-denominated bonds. 6- European investors expect a financial crisis in the USA to happen soon
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