Thursday, August 11, 2011

Quick economics question, easy 10 points!?

A. In the example you provide the price of the euro rose relative to dollars; where it previously cost 1.02 euros to purchase a dollar it now costs only 0.87 euros. This movement implies the affordability of European goods by holders of dollars has declined, and so net exports are reduced. The decline in exports also implies GDP will also fall since the balance of trade is a component of how GDP is calculated (X-M).

No comments:

Post a Comment