Using the information in Exercise 1, imagine that you are a purchasing agent for a domestic firm and you are thinking about buying goods from a European firm.

DATA FROM EXERCISE 1

1. Suppose that one euro costs 80¢ on January 1. Suppose that on March 1, one euro costs 75¢. What has happened to the value of the dollar (in terms of euros) over this period?

 Suppose the total value of those goods is €500,000. How much would you have spent if you’d purchased the goods in January? How much if you’d waited until March? Suppose you knew in January that you wanted to buy the goods, but that you wouldn’t actually make the expenditure until March. What action(s) could you take in January?