week 5
Direct and Indirect Exchange Rates
Consider the following data involving trade between the U.S. and France:
| Product | Domestic Price | January 1, 2011: | January 1, 2012: |
| 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.
