Draw a diagram for the foreign exchange market for the dollar vs. the euro. Mode

Question

Draw a diagram for the foreign exchange market for the dollar vs. the euro. Model your diagream on figure 10.3. Place "euros per dollar" on the vertical axis. Suppose now that rapid growth of the U.S. economy increases U.S. demand for European goods, while there is no change in growth of countries using the euro. Will the increase in U.S. growth affect the demand for ereos, the supply of eruos, both, or neither.? Why? Will the result be an appreciate, depreciation, or no change in the euro? Why?

I don't need the diagram for my answer, just the answer to the question. Thanks.

Explanation / Answer

as the US economy is growing, there will be an increase in demand of euros.

But, with the constant supply of euros , there will be appreciation of european currency.

Related Questions

Navigate

• Browse (All)
• Browse D
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.