Part I
Problem 1: Analyze the concept of exchange rate:
Problem 2: Explain how the dollar price of euros is determined.
Problem 3: Identify a factor that can increase the dollar price of euros.
Problem 4: Identify a factor that can decrease the dollar price of euros.
Problem 5: Explain why a rise in the dollar price of euros means a fall in the euro price of dollars.
Problem 6: Explain the purchasing-power-parity theory of exchange rates, using the euro-dollar exchange rate as an example.
Part II
Problem 1: Explain why a quota is more detrimental to an economy than a tariff that results in the same level of imports as the quota.
Problem 2: What is the net outcome of either tariffs or quota for the world economy?