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Brief Principles of Macroeconomics...

8th Edition
N. Gregory Mankiw
ISBN: 9781337091985

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BuyFindarrow_forward

Brief Principles of Macroeconomics...

8th Edition
N. Gregory Mankiw
ISBN: 9781337091985
Textbook Problem

Suppose the French suddenly develop a strong taste for California wines. Answer the following questions in words and with a diagram.

a. What happens to the demand for dollars in the market for foreign-currency exchange?

b. What happens to the value of the dollar in the market for foreign-currency exchange?

c. What happens to U.S. net exports?

Subpart (a):

To determine

The impact of new taste of wine developed.

Explanation

The international trade is the exchange of goods and services between the countries. The demand for the exports and imports of the economy determines the net exports of an economy. The net exports are the exports minus the imports of an economy...

Subpart (b):

To determine

The impact of new taste of wine developed.

Subpart (c):

To determine

The impact of new taste of wine developed.

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