I need a help!!! Consider the exchange rate between the U.S. dollar and the euro

Question

I need a help!!!

Consider the exchange rate between the U.S. dollar and the euro. Let the foreign currency be on the x-axis as in class. For each of the following, chose one of the graphs above which best illustrates the changes in the exchanges rate

e.The U.S. is the host of the next Olympics f.The Federal Reserve sells bonds in open market operations.

g. European wine gains new popularity in the United States.

h. Speculators believe the euro will depreciate in the near future.

i. A recession in Europe results in severe decreases in income.

j. A new political party in Europe which threatens to freeze all foreign assets in the country shows a strong following in the latest election polls.

Explanation / Answer

e) This means supply of euros will increase. Figure 1

f) Foreign subscribers of bonds will again supply more euros. Figure 1

g) Demand for euros will go up. Figure 2

h)Speculators start selling more euros -> the supply of euros increase -> Meanwhile the demand of the euros also declines as people do nto want to buy a currency which is expected to decline. => Figure 6

i) European income will decline => european imports from US will decline => supply for euros will decline => Figure 3

j) This would mean americans will convert their european holdings to dolalrs. => supply of euros will increase => Also, their demand for euros will decline as no one would want to trade with a country closed to business => figure 6

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