# What was the cost of the trip in 2012 measured in

• Homework Help
• 10
• 99% (238) 235 out of 238 people found this document helpful

This preview shows page 2 - 6 out of 10 pages.

3.What was the cost of the trip in 2012 measured in euros? Round to the nearest whole number.A) 1 euroB) 1,000 eurosC) 781 eurosD) 1.28 eurosFeedback: November 2012 - \$ 1.28 = 1 euro or 1/1.28 = .78125 euro per \$ - trip cost, 781.25 euros.Correct Answer(s):C
Table for Individual Question FeedbackPoints Earned:5.0/5.0
4.Using the data below, we are now going to use our supply/demand framework for US \$ to model the movementin the euro per \$ exchange rate between December 2007 (the very beginning of the Great Recession) and November 2008 (pretty much the height of the global financial crisis). Note that the data is given in \$ per euro and then converted into euro per dollar. For example, \$ 1.2 per euro is converted by 1/1.2 = .833 meaning that \$1 = .83 euro (this is the vertical axis on your graph, i.e., euro per \$).Draw a supply and demand diagram like we did numerous times in the lectures labeling the vertical axis as euro per \$, the horizontal axis with Quantity of dollars, the initial supply and demand curves labeled with 12/07, Label this initial intersection point as point A. Now explain what happened to each curve and WHY between 12/07 and 11/08. Label as point B with your supply and demand curves labeled accordingly(Hint: the two
Feedback:Table for Individual Question FeedbackPoints Earned:15.0/15.0
Correct Answer(s):5.Upload your graph here, using the Upload File buttonhomework 7 graph.pdfTable for Individual Question FeedbackPoints Earned:0.0/0.06.Summarize and explain what happened (and why) in your graph between 12/07 and 11/08
Table for Individual Question FeedbackPoints Earned:15.0/15.0Correct Answer(s):The recession in US lowered the supply (lower output, lower appetite for imports, willing to trade LESS \$ in for euros at any given exchange rate) of \$ and all else constant, should result in US dollar appreciation. We also have a financial crisis so the safe haven argument is that the demand to trade foreign exchange in for \$ US skyrocketed, everybody was seeking safety in dollar denominated assets, mostly US bonds.