What is the equilibrium euro price of the U.S. dollar

1. In Figure 17.3?

Figure 17.3

2. In Figure 17.4?
Figure 17.4

3. Did the dollar appreciate or depreciate in Figure 17.4?

Transcribed Image Text:

$1.45 1.40 Euros supplied by Supply • European consumers buying imports. European travelers. • European investors in U.S. markets. 1.35 1.30 S 1.25 5 1.20 1.15 Euros demanded by • U.S. travelers to Europe. • U.S. consumers buying European exports. • U.S.investors in European markets. 1.10 1.05 1.00 0.95 0.90 Demand 0.85 QUANTITY OF EUROS (euros per year) PRICE OF EURO (in U.S. dollars) $1.45 1.40 1.35 1.30 O 1.25 > 1.20 An increase in E2 euro demand causes it to ET appreciate. 1.15 1.10 1.05 8 1.00 8 0.95 E 0.90 0.85 D2 D1 QUANTITY OF EUROS (euros per year) PRICE OF EURO (in U.S. dollars)