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Proximate cause of this depreciation is actions
Course:- Business Economics
Reference No.:- EM13795681




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The euro has been depreciating against the $ for the past several months. The proximate cause of this depreciation is actions taken by the European Central Bank (ECB).

What were those actions?

Why did the ECB take those actions?

Were the actions intended to move the European AS curve or the AD curve? In what direction?

Suppose you are an American who had been planning to vacation in Italy this summer. You were planning to do this before the euro started to depreciate. Should you change your plans now? Why or why not?

From the point of view of the US, how will depreciation of the euro affect net exports (X-M), the AS curve and the AD curve?

Holding everything else constant, did the depreciation of the euro make the Federal Open Markets Committee more likely or less likely to raise the federal funds rate in the next few months? Or is it irrelevant for this decision? Explain your answer.




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