Suppose a French bottle of champagne costs 21.5 euros. o per dollar, so that a d

Question

Suppose a French bottle of champagne costs 21.5 euros. o per dollar, so that a dollar can buy 0.78 euro, how much will the champagne cost in the United States? Instructions: Enter your response rounded to two decimal places. Price of champagne in the United States: $ euro-dollar exchange rate rises to 115 euros per dollar, how much will the champagne cost in the United States? Instructions: Enter your response rounded to two decimal places. Price of champagne in the United States: $ c. If an increase in the euro-dollar exchange rate leads to an increase in Americans' dollar expenditures on French dollars supplied to the foreign exchange market as the euro-dollar exchange rate rises? The amount of dollars supplied to the foreign exchange market will Increase

Explanation / Answer

Price of Champagne in US: $ 27.56

Price of Champagne in US= Price in Euros / Euro-Dollar exchange rate.

= 21.5/0.78 = $27.56

Price of Champagne in US if euro dollar exchange rate is 1.15 euros per dollar =   $ 18.70

Price of Champagne in US= Price in Euros / Euro-Dollar exchange rate.

= 21.5/1.15 = $18.70

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