Question

In April, the U.S. dollar–euro exchange rate rises to $1.36 per euro. U.S. consumers respond to the dollar depreciation by reducing their imports to 95,000 European cars. Assuming that the average cost of a European car remains €18,000, the United States spends a total of $1.62 billion on imported European cars in April. If the total value of U.S. exports remains $0.98 billion, the United States has net exports of -$0.64 billion.

Name: in april the us dollareuro exchange rate rises to 136 per euro us consumers respond to the dollar depreciation by reducing their imports to 95000 european cars assuming that the average cost 96262
Uploaded: 2023-03-19T17:57:13-08:00
Duration: 2 min 53 s
Channel: Andrew Davis
Description: in april the us dollareuro exchange rate rises to 136 per euro us consumers respond to the dollar depreciation by reducing their imports to 95000 european cars assuming that the average cost 96262

          In April, the U.S. dollar–euro exchange rate rises to $1.36 per euro. U.S. consumers respond to the dollar depreciation by reducing their imports to 95,000 European cars. Assuming that the average cost of a European car remains €18,000, the United States spends a total of $1.62 billion on imported European cars in April. If the total value of U.S. exports remains $0.98 billion, the United States has net exports of -$0.64 billion.

Added by Jessica G.

Principles of Economics

Gregory Mankiw 8th Edition

Instant Answer

Solved by Expert Andrew Davis

03/19/2023

Step 1

To calculate the total value of European car imports, we can use the formula: Total value of imports = Quantity of imports * Cost per unit Total value of imports = 95,000 cars * €18,000 per car Total value of imports = €1,710,000,000 Show more…

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In April, the U.S. dollar–euro exchange rate rises to $1.36 per euro. U.S. consumers respond to the dollar depreciation by reducing their imports to 95,000 European cars. Assuming that the average cost of a European car remains €18,000, the United States spends a total of $1.62 billion on imported European cars in April. If the total value of U.S. exports remains $0.98 billion, the United States has net exports of -$0.64 billion.