Exhibit 34-4

-Refer to Exhibit 34-4. Under a fixed exchange rate system, at the exchange rate of E₃, the dollar is __________ and there is a __________.

Question

Exhibit 34-4 -Refer to Exhibit 34-4. Under a fixed exchange rate system, at the exchange rate of E₃, the dollar is __________ and there is a __________.

Quizplus · Accepted Answer

At the exchange rate of E₃, if the dollar is overvalued, it means that the value of the dollar is higher than it should be, leading to a surplus of dollars because foreign currencies are buying fewer dollars than they would at an equilibrium rate, resulting in an excess supply of dollars.

Exhibit 34-4 ​

Exhibit 34-4