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Question
Given a system of floating exchange rates, assume that Boeing Inc. of the United States places a large order, payable in euros, with a German contractor for jet engine parts. The immediate effect of this transaction will be a shift in the:
a. supply curve of euros to the left which causes the dollar to appreciate against the euro.
b. supply curve of euros to the right which causes the dollar to depreciate against the euro.
c. demand curve for euros to the left which causes the dollar to appreciate against the euro
d. demand curve for euros to the right which causes the dollar to depreciate against the euro
Answer
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