$$\begin{array} { | c | c | c | }
\hline \begin{array} { c }
\text { Quantity of Euros } \
\text { Supplied }
\end{array} & \text { Price } & \begin{array} { c }
\text { Quantity of Euros } \
\text { Demanded }
\end{array} \
\hline 400 & \$ 1.10 & 100 \
\hline 360 & 1.00 & 200 \
\hline 300 & 0.90 & 300 \
\hline 286 & 0.80 & 400 \
\hline 287 & 0.70 & 500 \
\hline
\end{array}$$ The table shows the supply and demand schedules for the European euro. Under a ?exible exchange-rate system, what will be the euro rate of exchange for one U.S. dollar?
A) 0.95 euro
B) 1.00 euros
C) 1.11 euros
D) 1.23 euros

Question

$$\begin{array} { | c | c | c | } 
\hline \begin{array} { c } 
\text { Quantity of Euros } \
\text { Supplied }
\end{array} & \text { Price } & \begin{array} { c } 
\text { Quantity of Euros } \
\text { Demanded }
\end{array} \
\hline 400 & \$ 1.10 & 100 \
\hline 360 & 1.00 & 200 \
\hline 300 & 0.90 & 300 \
\hline 286 & 0.80 & 400 \
\hline 287 & 0.70 & 500 \
\hline
\end{array}$$ The table shows the supply and demand schedules for the European euro. Under a ?exible exchange-rate system, what will be the euro rate of exchange for one U.S. dollar?
A) 0.95 euro
B) 1.00 euros
C) 1.11 euros
D) 1.23 euros

Quizplus · Accepted Answer

At the equilibrium point, the quantity of euros supplied is equal to the quantity of euros demanded, we can see from the table that at a price of 0.90 dollars, the quantity of euros supplied (300) is equal to the quantity of euros demanded (300), so this is the equilibrium price. Converting 0.90 dollars to euros gives 1/0.9 = 1.11 euros, which is the exchange rate at the equilibrium point.

The Table Shows the Supply and Demand Schedules for the \hline

The Table Shows the Supply and Demand Schedules for the
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