Figure 6-2
-Suppose that the supply of euros is at point C in the figure above and Europe only trades with the United States. We would conclude that ________ in the United States prefer ________ goods at ________ $ per euros.

Question

Figure 6-2 
-Suppose that the supply of euros is at point C in the figure above and Europe only trades with the United States. We would conclude that ________ in the United States prefer ________ goods at ________ $ per euros.

Quizplus · Accepted Answer

Point C represents a supply of euros, which means that Europe is supplying euros in exchange for American goods. This means that U.S. citizens are demanding euros to buy European goods. At point C, the exchange rate is 0.12 dollars per euro, which means that U.S. citizens prefer European goods at this exchange rate. Therefore, option A is correct.

Figure 6-2 -Suppose That the Supply of Euros Is at Point C