Suppose a French bottle of champagne costs 20 euros. a. If the euro-dollar exchange rate is 0.8

Question:

Suppose a French bottle of champagne costs 20 euros.
a. If the euro-dollar 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?
b. If the euro-dollar rises to 1 euro per dollar, how much will the champagne cost in the United States?
c. If an increase in the euro-dollar leads to an increase in Americans' dollar expenditures on French champagne, what will happen to the amount of dollars supplied to the as the euro-dollar rises?
Exchange Rate
The value of one currency for the purpose of conversion to another. Exchange Rate means on any day, for purposes of determining the Dollar Equivalent of any currency other than Dollars, the rate at which such currency may be exchanged into Dollars... Foreign Exchange Market
The foreign exchange market (also known as forex, FX or the currency market) is an over-the-counter (OTC) global marketplace that determines the exchange rate for currencies around the world. Participants are able to buy, sell, exchange and...