finally

1)     (20 points) Explain, in five sentences or less, exactly why the trade deficit in the US increased from 1995 to 2000.  There are two specific reasons. Make sure you explain clearly (the intuition) why each reason would add to our trade deficit.

2)  (40 points total)

a.     (10 points) Suppose that you received your college degree from Penn State and nailed a great job over in Europe in the summer of 2001.  Given that your family remains in the US, you make sure that you visit the family every November by traveling from Europe to the US.  We are going to compare the cost of this vacation, in terms of euros,  during two different periods: November 2002 and November 2012.  We assume that the cost of the trip, in terms of $ US, remains the same at $1,000 in both periods.  Using the link below and rounding down to two decimals, compare the euro cost of the trip in November 2002 vs. the euro cost of the trip in November 2012.

See the St. Louis Federal Reserve site for $ per euro exchange rate (to get actual data click on "view data" on left hand side of page)

b.      (30 points – 15 points for explanation and 15 points for correct and completely labeled diagram) Using the same link above, we are now going to use our supply/demand framework for US $ to model the movement in the euro per $ exchange rate between December 2007 (the very beginning of the Great Recession) and November 2008 (pretty much the height of the global financial crisis). 

Note that the data is in $ per euro so you need to convert it into euro per dollar before proceeding.  For example, $ 1.2 per euro is converted by 1/1.2 = .833 meaning that $1 = .83 euro (this is the vertical axis on your graph, i.e., euro per $).

Rounding down again to two decimals, draw a supply and demand diagram like we did numerous times in the lectures labeling the vertical axis as euro per $ and the initial supply and demand curves labeled with 12/07, Label this initial point as point A. 

Now explain what happened to each curve and WHY between 12/07 and 11/08.  Label this new point (11/08) as point B with your supply and demand curves labeled accordingly

(Hint: the two obvious facts during this period is that the 1) US was in a deep recession and 2) we were at the height of the (global) financial crisis (in 11/08). Assume all else is constant.

Fill in all the assignment paper details that are required in the order form with the standard information being the page count, deadline, academic level and type of paper. It is advisable to have this information at hand so that you can quickly fill in the necessary information needed in the form for the essay writer to be immediately assigned to your writing project. Make payment for the custom essay order to enable us to assign a suitable writer to your order. Payments are made through Paypal on a secured billing page. Finally, sit back and relax.

About Wridemy

We are a professional paper writing website. If you have searched a question and bumped into our website just know you are in the right place to get help in your coursework. We offer HIGH QUALITY & PLAGIARISM FREE Papers.

How It Works

To make an Order you only need to click on “Place Order” and we will direct you to our Order Page. Fill Our Order Form with all your assignment instructions. Select your deadline and pay for your paper. You will get it few hours before your set deadline.

Are there Discounts?

All new clients are eligible for 20% off in their first Order. Our payment method is safe and secure.

Hire a tutor today CLICK HERE to make your first order