Suppose the French suddenly develop a strong taste for California wines. Answer the following questions in words and with a diagram. a. What happens to the demand for dollars in the market for foreign-currency exchange? b. What happens to the value of dollars in the market for foreign-currency exchange? c. What happens to the quantity of net exports?
o Factors that change the budget line Income – a change in income causes a shift of the budget line Price of y – a change in price causes a rotation of the budget line Week 7 2/29/16 Price of x – a change in price causes a rotation of the budget line o What do we buy first The good that gives us the most: Marginal utility per dollar = MU / P Vacation vs. Cheeseburger o MU of vacation = 50,000 utils