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Identify a factor that can increase the dollar price of euros. Identify a factor that can...

Identify a factor that can increase the dollar price of euros. Identify a factor that can decrease the dollar price of euros. Explain why a rise in the dollar price of euros means a fall in the euro price of dollars.

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Answer #1

The dollar price of euro would increase when the euro appreciates with respect to dollars and the dollar price of euro would decrease when the euro depreciates with respect to dollars. One factor that can increase the dollar price of euro is when the demand for Europeans goods in the USA increases. This would increase the demand for euro and the dollar price of euro will increase. On the other hand, one factor that can decrease the dollar price of euro is when the demand for Europeans goods in the USA decreases. This would decrease the demand for euro and the dollar price of euro will decrease.

The euro price of the dollar = 1/ the dollar price of euro.

Therefore, if the dollar price of euro increases, the euro price of the dollar will decrease.

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