Microeconomics 20th Edition by McConnell, Sean Flynn, Stanley Brue

Exercise 2

Explain: "U.S. exports earn supplies of foreign currencies that Americans can use to finance imports." Indicate whether each of the following creates a demand for or a supply of European euros in foreign exchange markets;
a.A U.S. airline firm purchases several Airbus planes assembled in France.
b.A German automobile firm decides to build an assembly plant in South Carolina.
c.A U.S. college student decides to spend a year studying at the Sorbonne in Paris.
d.An Italian manufacturer ships machinery from one Italian port to another on a Liberian freighter.
e.The U.S. economy grows faster than the French economy.
f. A U.S. government bond held by a Spanish citizen matures, and the loan amount is paid back to that person.
g.It is widely expected that the euro will depreciate in the near future.