Refer to Figure 15.2 for the following questions.
Figure 15.2

-Which of the following would cause the change depicted in Figure 15.2? Note that the figure depicts the quantity of euros traded.
A)European productivity rises relative to Australian productivity.
B)Japanese decrease their preferences for goods produced in the EU relative to Australian goods.
C)The European Union increases its quotas on German wrist watches.
D)The price level of goods produced in the EU increases relative to the price level of goods produced in Australia.

Question

Refer to Figure 15.2 for the following questions.
Figure 15.2
 
-Which of the following would cause the change depicted in Figure 15.2? Note that the figure depicts the quantity of euros traded.
A)European productivity rises relative to Australian productivity. 
B)Japanese decrease their preferences for goods produced in the EU relative to Australian goods. 
C)The European Union increases its quotas on German wrist watches. 
D)The price level of goods produced in the EU increases relative to the price level of goods produced in Australia.

Quizplus · Accepted Answer

If the price level of goods produced in the EU increases relative to the price level of goods produced in Australia, this will cause a decrease in demand for EU goods and an increase in demand for Australian goods, resulting in a decrease in the Euro-Australian dollar exchange rate depicted in Figure 15.2.

Refer to Figure 15.2 for the Following Questions