In order to import German goods into the United States,U.S.importers must buy those goods with German currency,i.e.,Euros.Assume,all else constant,there is a decrease in the price of U.S.-made cars compared to the price of German cars.Based on this information,we can conclude,with certainty,that in the market for Euros (where the price of Euros is measured in dollars),this would cause:

Question

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If the price of American cars decreases compared to German cars, this will shift demand towards American cars and away from German cars. As a result, there will be less demand for Euros as U.S. importers will need fewer Euros to buy the same amount of German goods. This will cause a decrease in the equilibrium price of Euros in the market where the price of Euros is measured in dollars.

In Order to Import German Goods into the United States,U