The Price of a Computer in the United States Is

question 274

Essay

The price of a computer in the United States is $1,000. The price of a car in Germany is 10,000 euros. The current exchange rate is 0.9 euros per dollar.
a) If a computer is exported from the United States to Germany with no barriers to trade, what will be the price computer in Germany?
b) If a car is imported to the United States from Germany with no barriers to trade, what will be the price of the the United States?
c) Suppose the dollar appreciates by 10 percent against the euro. How will the price of a computer exported fro United States change in Germany?
d) Suppose the dollar appreciates by 10 percent against the euro. How will the price of a car imported to the Un States from Germany change in the United States?

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