1. An American traveling in Europe buys a dinner costing 60 euros. If the exchan
ID: 1120902 • Letter: 1
Question
1. An American traveling in Europe buys a dinner costing 60 euros. If the exchange rate is 1 euro = $0.77, then the price of the dinner in dollars is a. $7.70. b. $46.20. c. $55.67. d. $77.92. If a country's currency depreciates in the foreign exchange market, a. Its currency becomes more expensive in terms of another currency. b. The country's exports become more expensive. c. Its currency becomes cheaper in terms of another currency. d. The country's imports become cheaper. 3 If the exchange rate of U.S. dollars to Mexican pesos was $1.00 3 pesos in 1995 and $1.00 11 pesos in 2009, then a. The U.S. dollar depreciated relative to the Mexican peso. b. The Mexican peso appreciated relative to the U.S. dollar c. The U.S. dollar appreciated relative to the Mexican peso. d.Mexican imported goods became more expensive in the United States 4.If Americans want to purchase more European imports, then the a. Demand curve for U.S. dollars shifts to the right. b. Demand curve for euros shifts to the left. c. Supply curve for euros shifts to the right. d. Supply curve for U.S. dollars shifts to the right.Explanation / Answer
Answer.)
1.) b.) $46.20
1 Euro = $0.77
60 Euro = 60 x $0.77 = $46.20
2.) c.) The currency becomes cheaper in terms of another currency
3.) c.) The U.S. dollar appreciated relative to the mexican peso.
Since same dollar can be converted in more pesos, therefore, The U.S. dollar appreciated relative to the mexican peso.
4.) d.) Supply curve for U.S. dollars shifts to the right
If Americans buy more European products, they will supply more dollars to the foreign exchange market and demand more euros.
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