The Price of a Computer in the United States Is

question 91

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 of the 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 car in the United States?
c) Suppose the dollar appreciates by 10 percent against the euro. How will the price of a computer exported from the 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 United States from Germany change in the United States?

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Definitions:

Identification

The process by which, according to Freud, children incorporate their parents’ values into their developing superegos.

Echoic Memory

Echoic memory refers to the auditory component of sensory memory, where sounds are briefly stored before they are processed.

Auditory Stimuli

Sounds or noises that initiate a response or reaction in the listener.

Effortful Processing

A type of information processing in the brain that requires a conscious effort and attention, unlike automatic processes.