Suppose a bottle of French wine costs 70 francs. If the exchange rate moves from 6 francs /dollar to 7 francs / dollar, how much does the price of the wine change measured in dollars?
1) The price rises from $10 to $11.66.
2) The price falls from $11.66 to $10.
3) The price remains unchanged, because the price in French francs is constant.
4) The change in price depends on how strong the dollar is.