Suppose that the United States and Italy both produce wine and shoes. In the United States, wine sells for $10 a bottle and shoes sell for $40 a pair. In Italy, wine sells for 15 euros a bottle and shoes sell for 20 euros a pair. If the current exchange rate is 0.8 euro to the dollar, then

A. the United States will import both shoes and wine from Italy.
B. Italy will import both shoes and wine from the United States.
C. the United States will import shoes from Italy and Italy will import wine from the United States.
D. the United States will import wine from Italy and Italy will import shoes from the United States.


Answer: C

Economics

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