If prices in Germany fall at the same time that the euro appreciates, we will be...

If prices in Germany fall at the same time that the euro appreciates, we will be able to immediately predict the impact on net exports.

True or False

Expert Solution

We can predict the impact on net exports when the price of products fall in Germany and euro appreciates.

When exchange rate changes, the price of imported goods will change in value including domestic product that relay on imported parts and raw materials. In this era of globalization, goods from other countries are as common place, exchange rate have significant impact on price you pay for imported product. A weaker domestic currency means that the price you pay for foreign goods will generally rise significantly. The change in price of imported products depends on how the currency of exporting nations have fared against the domestic currency. A weak domestic currency can push up the inflation rate in nation because of high price for foreign product. This may induce the central bank to raise the interest rate to counter inflation as well as to support the currency and prevent it from plugging sharply.

A fall in price in German will stimulate net exports and make import more expensive. Conversely, a strong domestic currency hamper exports and make imports cheaper.

Rahul Sunny answered 2 years ago

if the prices in the US fall at the same time that the dollar appreciates, we...

if the prices in the US fall at the same time that the dollar appreciates, we will be able to immediately predict the impact on net exports T/F

Germany and the Euro: How has Germany benefited from the Euro- pean Union and the euro...

Germany and the Euro: How has Germany benefited from the Euro- pean Union and the euro in particular? Explain.

If there is excess demand in a market, we can expect that: A) prices will fall...

If there is excess demand in a market, we can expect that: A) prices will fall because some suppliers will find it in their interest to lower prices. B) prices will rise because some suppliers will find it in their interest to raise prices. C) the demand curve will shift to the left to restore equilibrium. D) the demand curve will shift to the right to restore equilibrium

1. If prices of substitute goods (for consumers) decrease at the same time prices of substitute...

1. If prices of substitute goods (for consumers) decrease at the same time prices of substitute goods (for producers) decrease, what will happen to prices in this market? a Prices will not change. b Prices will decrease. c Prices will increase. d One cannot tell without more information. 2. A change in demand will cause the equilibrium price to change by ______________and the equilibrium quantity to change by ______________ with an inelastic supply than if supply were elastic. a more;...

If the Turkish Lira appreciates against the euro, then A) Europeans should find Turkish goods now...

If the Turkish Lira appreciates against the euro, then A) Europeans should find Turkish goods now less expensive. B) Turkish consumers would find Turkish goods relatively less expensive than European goods. C) European goods should have an easier time competing against Turkish goods in both countries. D) Turkish goods should have an easier time competing against European goods in both countries. Find the true one please

Why we may say that Germany plays the same role for the EU as China does...

Why we may say that Germany plays the same role for the EU as China does for the USA in terms of trade and financial flows (BOP)? What is unique about the middle and small German enterprises.

Germany and Greece follow the euro, so the exchange rate is fixed. but the productivity of...

Germany and Greece follow the euro, so the exchange rate is fixed. but the productivity of Germany is higher, productivity growth can be modelled as falling price levels because technology improvements will lead to cheaper production cost. Why will this imbalance in productivity cause issues with the fixed exchange rate and the stability of the euro?

Assume that you are in Germany. The current spot exchange rate of the Euro (EUR) against...

Assume that you are in Germany. The current spot exchange rate of the Euro (EUR) against the US dollar (USD) is 0.8426 EUR per USD (EUR/USD). Suppose that the spot exchange rate is 0.8730 EUR/USD tomorrow. Has the USD appreciated or depreciated against the EUR? Calculate the percentage change in the USD.

Can we say that prices of bonds are equally sensitive to the same percentage increases or...

Can we say that prices of bonds are equally sensitive to the same percentage increases or decreases of the market interest rate (YTM)? Explain. (i.e. Market interest rate increases, say, from 5% to 6% or decreases from 5% to 4%)

can we say that prices of bonds are equally sensitive to the same percentage increases or...

can we say that prices of bonds are equally sensitive to the same percentage increases or decreases of the market interest rate (ytm)? Explain. (i.e. Market interest rates increases, say, from 4% to 6% or decreases from 6% to 4%) Please explain the impact of coupon amount (say $30 coupon vs. $$85 coupon) on the interest rate sensitivity of a bond. In other words, if the market interest rate changes, which bond's price will change more, the one with the...

Question