Dollar Price of E $2.00 $1.60- $1.20 Demand Euros 0 75 100 125 Quantity of Euros (Billions) Refer to the above diagram. If U.S. consumers increase their travel to Euro Zone nations, we would expect: the demand for euros to increase, and the euro to appreciate. the demand for euros to increase, and the dollar to appreciate. the supply of euros to increase, and the euro to depreciate. the supply of euros to decrease, and the dollar to depreciate.

In 2001, the United Kingdoms economy exported goods worth 192 billion and services worth another 77 billion. It imported goods worth 225 billion and services worth £66 billion. Receipts of income from abroad were 140 billion while income payments going abroad were 131 billion. Government transfers from the United Kingdom to the rest of the world were 23 billion, while various U.K government agencies received payments of 16 billion from the rest of the world. Calculate the U.K. merchandise trade deficit for 2001. Calculate the current account balance for 2001. Explain how you decided whether payments on foreign investment and government transfers counted on the positive or the negative side of the current account balance for the United Kingdom in 2001.

Use the following table, which shows the supply and demand schedules for the euro, to answer the next question. Quantity of Euros Price Supplied 400 360 300 286 267 Multiple Choice $1.10 1.00 0.90 0.80 0.70 O If the U.S. government decides to fix or peg the price of the euro at $1.00, it would have to buy 360 euros. sell 160 euros. buy 100 euros. Quantity of Euros Demanded 100 sell 360 euros. 200 300 400 500

If the U.S. income level rises at a much higher rate than does the Eurozone income level.  Other things being equal, how should this affect the:    (a) U.S. demand for Euro,    (b) supply of Euro for sale, and    (c) equilibrium value of Euro?