Solved

Figure 30-8 -Refer to Figure 30-8. the Equilibrium Exchange Rate Is at Rate

Question 153

Multiple Choice

Figure 30-8 Figure 30-8 -Refer to Figure 30-8. The equilibrium exchange rate is at A, $1.25/euro. Suppose the European Central Bank pegs its currency at $1.00/euro. Speculators expect that the value of the euro will rise and this shifts the demand curve for euro to D<sub>2</sub>. After the shift A) there is a shortage of euros equal to 1,000 million. B) there is a surplus of euros equal to 400 million. C) there is a shortage of euros equal to 800 million. D) there is a surplus of euros equal to 500 million.
-Refer to Figure 30-8. The equilibrium exchange rate is at A, $1.25/euro. Suppose the European Central Bank pegs its currency at $1.00/euro. Speculators expect that the value of the euro will rise and this shifts the demand curve for euro to D2. After the shift


A) there is a shortage of euros equal to 1,000 million.
B) there is a surplus of euros equal to 400 million.
C) there is a shortage of euros equal to 800 million.
D) there is a surplus of euros equal to 500 million.

Correct Answer:

verifed

Verified

Unlock this answer now
Get Access to more Verified Answers free of charge

Related Questions

Q145: The Bulgarian currency,the lev,is pegged to the

Q148: Figure 30-8 Figure 30-8 </p></div><svg width=

Q150: The year in which euro coins and

Q154: Fluctuating exchange rates can alter a multinational

Q154: Article Summary
According to Gautam Kalani, currency strategist

Q155: Figure 30-7 Figure 30-7 </p></div><svg width=

Q156: Figure 30-7 Figure 30-7 </p></div><svg width=

Q156: If a country sets a pegged exchange

Q158: Pegging a country's exchange rate to the

Q160: You decide to work in London for

Unlock this Answer For Free Now!

View this answer and more for free by performing one of the following actions

qr-code

Scan the QR code to install the App and get 2 free unlocks

upload documents

Unlock quizzes for free by uploading documents