Macroeconomics 9th Edition by David Colander

Exercise 5

The government of Never-Never Land, after much deliberation, finally decides to switch to a fixed exchange rate policy.t does this because the value of its currency, the neverback, is so high that the trade deficit is enormous.he finance minister fixes the rate at $10 a neverback, which is lower than the equilibrium rate of $20 a neverback.
a.hat trade or traditional macro policy options could accomplish this lower exchange rate
b.sing the laws of supply and demand, show graphically how possible equilibria are reached.