Assume that the only two currencies in the world are the U.S. dollar and the euro...

   

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Assume that the only two currencies in the world are the U.S. dollar and the euro and that the US dollar has recently appreciated. 1. What will happen to US net exports? Explain. 2. Identify who likely benefits from a stronger dollar. 3. Identify who is likely harmed by a stronger dollar. Part 2-Practice-Fill out the chart and identify if the following will (increase) or (decrease). Change US exports US imports European exports 4. The euro depreciates 5. The dollar depreciates 6. The euro appreciates. European imports 7. The dollar appreciates Part 3-Stretch Your Thinking- Imagine that you are an economic advisor of President Knotbright. Correct his misunderstandings and provide him sound economic advice. 8. President Knotbright is appalled that $1 US dollar only buys 0.9 euros. He tells the public that Europeans are taking advantage of Americans since everything in Europe is 10% cheaper. 9. President Knotbright tells you, "I think we should have both a strong U.S. dollar and more U.S. exports." 10. President Knotbright tells the public, "Every American is harmed when China devalues their currency." 1. President Knotbright claims that placing tariffs on foreign imports will increase the amount the US exports. Assume that the only two currencies in the world are the U.S. dollar and the euro and that the US dollar has recently appreciated. 1. What will happen to US net exports? Explain. 2. Identify who likely benefits from a stronger dollar. 3. Identify who is likely harmed by a stronger dollar. Part 2-Practice-Fill out the chart and identify if the following will (increase) or (decrease). Change US exports US imports European exports 4. The euro depreciates 5. The dollar depreciates 6. The euro appreciates. European imports 7. The dollar appreciates Part 3-Stretch Your Thinking- Imagine that you are an economic advisor of President Knotbright. Correct his misunderstandings and provide him sound economic advice. 8. President Knotbright is appalled that $1 US dollar only buys 0.9 euros. He tells the public that Europeans are taking advantage of Americans since everything in Europe is 10% cheaper. 9. President Knotbright tells you, "I think we should have both a strong U.S. dollar and more U.S. exports." 10. President Knotbright tells the public, "Every American is harmed when China devalues their currency." 1. President Knotbright claims that placing tariffs on foreign imports will increase the amount the US exports.

Answer rating: 100% (QA)

When the US dollar appreciates it means it gains value relative to the euro This generally leads to a decrease in US net exports A stronger US dollar ... View the full answer