If European inflation suddenly becomes must higher than U.S.inflation, the U.S.demand for European goods will ____.In addition, the supply of euros to be sold for dollars will ____; both forces will place ____ pressure on the value of the euro.

Question

Quizplus · Accepted Answer

If European inflation is higher than U.S. inflation, U.S. demand for European goods will decrease because they become more expensive. Simultaneously, Europeans will find U.S. goods cheaper, increasing the supply of euros to be sold for dollars. Both factors will exert downward pressure on the euro's value.

If European Inflation Suddenly Becomes Must Higher Than U