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Problem 28-07 Suppose a French bottle of champagne costs 20.5 euros. Instructions: Enter your responses rounded to the nearest penny (two decimal places). a. If the euro-dollar exchange rate is 0.8 euro per dollar, so that a dollar can buy 0.8 euro, how much will the champagne cost in the United States? Price of champagne in the United States:S b. If the euro-dollar exchange rate rises to 1.05 euros per dollar, how much will the champagne cost in the United States? Price of champagne in the United States: $ Cif an increase in the euro-dollar exchange rate leads to an increase in Americans' dollar expenditures on French champagne, what will happen to the amount of dollars supplied to the foreign exchange market as the euro-dollar exchange rate rises?

Problem 28-07 Suppose a French bottle of champagne costs 20.5 euros. Instructions: Enter your responses rounded to the nearest penny (two decimal places). a. If the euro-dollar exchange rate is 0.8 euro per dollar, so that a dollar can buy 0.8 euro, how much will the champagne cost in the United States? Price of champagne in the United States:S b. If the euro-dollar exchange rate rises to 1.05 euros per dollar, how much will the champagne cost in the United States? Price of champagne in the United States: $ Cif an increase in the euro-dollar exchange rate leads to an increase in Americans' dollar expenditures on French champagne, what will happen to the amount of dollars supplied to the foreign exchange market as the euro-dollar exchange rate rises?

Brief Principles of Macroeconomics (MindTap Course List)
Brief Principles of Macroeconomics (MindTap Course List)
8th Edition
ISBN:9781337091985
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter13: Open-economy Macroeconomics: Basic Concepts
Section: Chapter Questions
Problem 8PA
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Problem 28-07 Suppose a French bottle of champagne costs 20.5 euros. Instructions: Enter your responses rounded to the nearest penny (two decimal places). a. If the euro-dollar exchange rate is 0.8 euro per dollar, so that a dollar can buy 0.8 euro, how much will the champagne cost in the United States? Price of champagne in the United States: $ b. If the euro-dollar exchange rate rises to 1.05 euros per dollar, how much will the champagne cost in the United States? Price of champagne in the United States: $ c. If an increase in the euro-dollar exchange rate leads to an increase in Americans' dollar expenditures on French champagne, what will happen to the amount of dollars supplied to the foreign exchange market as the euro-dollar exchange rate rises? The amount of dollars supplied to the forelgn exchange market will decrease
Transcribed Image Text:Problem 28-07 Suppose a French bottle of champagne costs 20.5 euros. Instructions: Enter your responses rounded to the nearest penny (two decimal places). a. If the euro-dollar exchange rate is 0.8 euro per dollar, so that a dollar can buy 0.8 euro, how much will the champagne cost in the United States? Price of champagne in the United States: $ b. If the euro-dollar exchange rate rises to 1.05 euros per dollar, how much will the champagne cost in the United States? Price of champagne in the United States: $ c. If an increase in the euro-dollar exchange rate leads to an increase in Americans' dollar expenditures on French champagne, what will happen to the amount of dollars supplied to the foreign exchange market as the euro-dollar exchange rate rises? The amount of dollars supplied to the forelgn exchange market will decrease
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