Question 1: The President of the U.S. announces that he will reduce inflation with a new anti-inflation program. If the public believes him, predict what will happen to U.S. exchange rates.
Question 2: If American auto companies make a breakthrough in automobile technology and are able to produce acar that gets 60 miles to the gallon, what will happen to the U. S. exchange rates?
Question 3: If the expected inflation drops in Europe so that international rates fall there, predict what will happen to the US. exchange rates.
Question 4: If there is a strike in France, making it harder to buy French goods, what will happen to the value of the euro?