Based on this figure, if the krone exchange rate is fixed at $0.15 dollars per krone, then the krone is:
A)devalued.
B)revalued.
C)overvalued.
D)undervalued.

Question

Based on this figure, if the krone exchange rate is fixed at $0.15 dollars per krone, then the krone is: 
A)devalued. 
B)revalued. 
C)overvalued. 
D)undervalued.

Quizplus · Accepted Answer

Since the official fixed exchange rate of 0.15 U.S. dollars per Krone is higher than the fundamental value of the nominal exchange rate of 0.11 U.S. dollars per Krone, the Krone is overvalued.

Based on This Figure, If the Krone Exchange Rate Is