Question

Suppose that the US dollar/ euro exchange rate is $2/ €. Use this information to determine the following:

a)Price of a $50 U.S. sweater in Paris (in euros)
b)Price of a € 100 French shirt in New York (in dollars)
c) Provide an example exchange rate that would be a US dollar appreciation vs. the euro
d)Suppose more Americans suddenly want to visit France. Would tend to cause a US dollar depreciation or US dollar appreciation?

Answer 1

a) price of a $50 U.S sweater in paris = 50/2 = 25 euros

B) price of a € 100 french shirt in new york = 100 * 2 = $200.

C) when more of the french people come to America to visit . it will appreciatedd US dollar or when the imports from French to America has been increase or in other words, the America export to French increased, the value of U.S dollar appreciate

d) it will tend to US dollar depreciation because, The supply of U.S dollar in the international market increase and thus the value of U.S dollar decrease as the supply increases or we can say U.S dollar will depreciate.