How would a substantial appreciation in the European euro in the foreign exchange market affect the quantity of imports of European products by the U.S.? How would such an appreciation of the European euro affect travel by Americans to Europe?
What will be an ideal response?
If the euro increased in value (appreciated), it means that Americans obtain fewer euros for each U.S. dollar exchanged in foreign exchange market. Therefore, Americans will need more dollars to pay for European products, so the quantity demanded would fall and fewer European products would be imported into the U.S. Also, the appreciation of the euro would make it more costly for Americans to travel in Europe because the dollar would now buy fewer euros.
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Legislation that involves widespread benefits but concentrated costs is called:
a. traditional public-goods legislation. b. special-interest legislation. c. competing-interest legislation. d. populist legislation.
If there are no unexploited opportunities for individuals in a particular market, then one can conclude that:
A. the market is in equilibrium. B. the market is not in equilibrium. C. government regulation has been successful. D. a socially optimal outcome has been achieved.