Homework Answers
Answer: Foreign demand for US goods and service will decrease
Explanation:
When the US dollar appreciates relative to Euro, the value of dollar related to Euro will increase. US goods will become expensive for the foreign markets. They will reduce consumption of US goods and services and hence the foreign demand for US goods and service will decrease. Foreign exports to US will increase because foreign goods will become cheaper comparing US products and the demand for foreign products will increase. Profit will not change. Hence the answer is that foreign demand for US goods and service will decrease.
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