Exhibit 35-4

-Refer to Exhibit 35-4.Under a fixed exchange rate system,at the exchange rate of E₃,the dollar is __________ and there is a __________.

Question

Exhibit 35-4 -Refer to Exhibit 35-4.Under a fixed exchange rate system,at the exchange rate of E₃,the dollar is __________ and there is a __________.

Quizplus · Accepted Answer

Under a fixed exchange rate system, if the exchange rate is set above the equilibrium rate, the currency is overvalued, leading to a surplus of that currency. In this case, at E3, the dollar is overvalued, resulting in a surplus of dollars.

Exhibit 35-4 -Refer to Exhibit 35-4.Under a Fixed Exchange Rate System,at the Exchange