Asked by
Kiara Pierre
on Dec 08, 2024
Verified
Suppose that the United States and Italy both produce wine and shoes. In the United States, wine sells for $10 a bottle and shoes sell for $40 a pair. In Italy, wine sells for 15 euros a bottle and shoes sell for 20 euros a pair. If the current exchange rate is 0.8 euro to the dollar, then
A) Italy will import both shoes and wine from the United States.
B) the United States will import both shoes and wine from Italy.
C) the United States will import shoes from Italy and Italy will import wine from the United States.
D) the United States will import wine from Italy and Italy will import shoes from the United States.
Exchange Rate
How much one currency is worth in terms of another during exchange.
Euros
The official currency of 19 of the 27 European Union countries, known as the Eurozone.
- Master the process of computing the value of items in alternate currencies through the application of exchange rates.
- Analyze the role of exchange rates in trade balance and how they affect trade surplus or deficit.
Verified Answer
KP
Learning Objectives
- Master the process of computing the value of items in alternate currencies through the application of exchange rates.
- Analyze the role of exchange rates in trade balance and how they affect trade surplus or deficit.