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When the price of a euro in dollars falls, which of the following becomes more likely?...

When the price of a euro in dollars falls, which of the following becomes more likely?

a.) A decrease in the number of BMW's imported to the U.S.

b.) An increase in the number of unemployed U.S. autoworkers

c.) A decrease in the number of U.S. tourists in Italy

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Answer #1

Option B is correct

This is likely to create Euro depreciation because the price of one Euro has decreased dollars making European goods attractive to foreigners including Americans. US tourists are more likely to visit Italy as they can spend more with same US dollars. Also they will be able to purchase a greater number of imported goods including BMW. This will result in increasing the importance of cars and reducing employment in domestic automobile sector

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