Other things the same,when a Greek company imports bicycles from the U.S. ,the open-economy macroeconomic model treats this transaction as an increase in the quantity of dollars demanded in the U.S.foreign-currency exchange market.

Question

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When a Greek company imports bicycles from the U.S., it needs to exchange Greek currency (euros) for U.S. dollars to pay for the imports. This increases the demand for U.S. dollars in the foreign-currency exchange market, causing the price of the dollar to appreciate relative to the euro. The open-economy macroeconomic model takes into account the effects of international trade and capital flows on exchange rates and other macroeconomic variables.

Other Things the Same,when a Greek Company Imports Bicycles from the U.S