Plot the euro-dollar exchange rate since 1999. You can use foreign exchange rate data from the Federal Reserve website. What has happened to the exchange rate between euro and dollar since the introduction of Euro, before the 2008 financial crisis, and after the crisis? What is the impact of a relatively strong euro on European companies in general? If the U.S. dollar is relatively weak (strong) compared to the euro, U.S. exports to the euro-zone should increase (decrease) and imports should fall (increase), leading to an improvement (deterioration) in the U.S. trade balance with the euro-zone. Against this theoretical perspective, examine the relationship between the euro-dollar exchange rate and the U.S. trade balance with the EU. Has the U.S. trade balance improved when euro was strong and deteriorated when euro was weak? Explain why or why not? Using two examples of European companies to illustrate what measures have European exporters/MNCs taken to reduce adverse effects of a strong/weak euro? A single currency imposed many restrictions on member countries. For example, they lost monetary independence. Some countries in recession can’t lower interest to stimulate local economy. Explain what are risks for European countries to adopt a single currency? How can the country problems of Greece, Spain, Italy, and Portugal make it difficult to maintain the single currency? In your opinion, will some countries leave the Euro zone in the near future? Will Euro continue to exist? Is Brexit related to Eurozone crisis and if yes, how?
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