A change in the Euro-dollar exchange rate from $1 per Euro to $2 per Euro would ____ the U.S.price of German goods, ____ the number of German goods that would be demanded in the U.S.

Question

Quizplus · Accepted Answer

An increase in the Euro-dollar exchange rate from $1 to $2 per Euro means that the Euro has appreciated relative to the dollar. This makes German goods more expensive in U.S. dollars, thus increasing their price and reducing the quantity demanded in the U.S.

A Change in the Euro-Dollar Exchange Rate from $1 Per