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Appreciation & Depreciation

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1. Show the effect of dollar appreciation and depreciation with the Euro on the price of US exports and imports by updating the table below:

R = Euro/$ Domestic Price Jan 01:
R = 1.06 Jan 02:
R = 1.14 Effect on Exports (X)
and Imports (M)
U.S. exports: Televisions $1,000
U.S. imports: European cars Euro 25,000
Feb 02:
R =1.15 May 02:
R = 1.08
U.S. exports: Televisions $1,000
U.S. imports: European cars Euro 25,000

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1. Show the effect of dollar appreciation and depreciation with the Euro on the price of US exports and imports by updating the table below:

R = Euro/$ Domestic Price Jan 01:
R = 1.06 Jan 02:
R = 1.14 Effect on Exports (X)
and Imports ...

Solution Summary

This solution is comprised of a detailed explanation to show the effect of dollar appreciation and depreciation with the Euro on the price of US exports and imports by updating the table below.

$2.19
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Effects of Currency Appreciation and Depreciation

a) Given illustrative data for a company selling its output in a foreign country, calculate effects of an appreciation and a depreciation in the exchange rate on the price of its output in that country and the likely effects on the demand for its output.

b) For a company sourcing key inputs in a foreign country, calculate effects of an appreciation and depreciation in the exchange rate on its input prices and the likely effects on the company's cost of production.

c) can a devaluation of the dollar, improve US GDP and provide economic growth? Based on your observation, is that statement true and why? Explain and justify your claims

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