Direct and Indirect Exchange Rates
Consider the following data involving trade between the U.S. and France:
|
Product
|
Domestic Price
|
January 1, 2011: US$1 = 1.033 Euros
|
January 1, 2012: US$1 = 1.064 Euros
|
|
U.S. exports industrial machinery
|
$100,000
|
(a)
|
(c)
|
|
French grapes agricultural products
|
€960,000
|
(b)
|
(d)
|
a - d. Fill in the values in the table above.
e. Explain what would happen to U.S. exports of industrial machinery to France and U.S. imports of grapes from France as a result of the exchange rate change from 2011 to 2012. Minimum of 200 words.