Explore BrainMass

Explore BrainMass

    Exchange Rate and Depreciation

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    If the European euro were to depreciate relative to the U.S. dollar in the foreign exchange market, would it be easier of harder for the French to sell their wine in the United States? Suppose you were planning a trip to Paris. How would depreciation of the euro change the dollar cost for your trip?

    © BrainMass Inc. brainmass.com October 10, 2019, 2:05 am ad1c9bdddf

    Solution Preview

    Consider a bottle of French wine that sells for 20 euros in Paris. Suppose the initial exchange rate is $1.5 for each euro. In the absence of transportation and trade costs the bottle ...

    Solution Summary

    This 144 word solution explains the effect of the change in exchange rate.