Suppose that the exchange rate ($/Euro) is 1.10 on July 1st….

Suppose that the exchange rate ($/Euro) is 1.10 on July 1st.  Now suppose that the Federal Reserve engages in expansionary monetary policy on July 2nd.   What is the most likely cost for a U.S. steel importer to purchase steel from a European producer that wants to sell the steel for 1,600 euros on July 2nd after the Federal Reserve’s actions?

Suppose that the value of a bond is initially $1,000 at the…

Suppose that the value of a bond is initially $1,000 at the beginning of the year and inflation is 8% over the course of 1 year.  What did inflation do to the real value of the debt (liability) after 1 year for the debtor and the real value of the bond (asset) for the bondholder (creditor)?