In January 2007, the dollar bought 0.77 euros. In June 2008, the dollar bought 0.62 euros. As a result, there was in U.S. imports from Europe and in the foreign exchange market.

Question

Quizplus · Accepted Answer

When the dollar buys fewer euros, it means that the dollar has decreased in value relative to the euro. This makes imports from Europe more expensive for U.S. consumers and businesses, leading to a decrease in demand for those imports. As a result, there will be a decrease in the supply of dollars as U.S. consumers and businesses will demand less euros to pay for their imports. Additionally, the decrease in demand for imports can lead to a decrease in the demand for euros in the foreign exchange market.

In January 2007, the Dollar Bought 0