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