Ch 5 Global Trade [AP & Reg]

How would a us economic expansion affect the value of

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: Euros] [E ur os lo ok ing fo r d oll ar s 150 100 50 QD$ QD$ QD$ Quantity of Dollars Quantity Reason for: Upward Sloping “S” Curve [As Euro price increases, QS of dollars increase] D s [D oll a rs lo ok ing fo r e u ro s Euro Price of $ [Euros looking for $’s] 150 100 50 QS$ QS$ QS$ Quantity of Dollars Quantity D1 APPRECIATION Or DEPRECIATION Euro Price of $ [Euros looking for $’s] 150 150 100 100 50 50 Dollar Price of Euro Europeans decide to buy more American cars. more $1.50 D D3 A D2 E2 M will increase E1 E3 X will increase D # of Dollars A Europeans decide to buy fewer American cars. fewer D1 S [Euros looking for Dollars] [Dollars looking for Euros] $1.00 $ .50 D s [Dollars looking for Euros] # of Euros A Increase in U.S. Growth Rate (Y) Increase [We buy more from Japan appreciating the yen and depreciating the dollar] the and depreciating The country who initiates the action (buying foreign goods, investing based on higher interest rates in foreign country, etc.) is the country whose supply of currency moves. Price of $1.50 $1.00 D1 D “We...
View Full Document

{[ snackBarMessage ]}

Ask a homework question - tutors are online