The figure given below depicts the demand and supply of Brazilian reals in the foreign exchange market. Assume that the market operates under a flexible exchange rate regime.?Figure 21.1??In the figure:?D₁ and D₂: Demand for Brazilian reals?S₁ and S₂: Supply of Brazilian reals

-Refer to Figure 21.1. Determine the equilibrium exchange rate and equilibrium quantity of Brazilian reals, if D₁ and S₁ are the relevant demand and supply curves for Brazilian reals in this market.
A) 10 pesos per real and a quantity of 150 reals
B) 6 pesos per real and a quantity of 250 reals
C) 8 pesos per real and a quantity of 150 reals
D) 8 pesos per real and a quantity of 250 reals
E) 6 pesos per real and a quantity of 200 reals

Question

The figure given below depicts the demand and supply of Brazilian reals in the foreign exchange market. Assume that the market operates under a flexible exchange rate regime.?Figure 21.1??In the figure:?D₁ and D₂: Demand for Brazilian reals?S₁ and S₂: Supply of Brazilian reals
 
-Refer to Figure 21.1. Determine the equilibrium exchange rate and equilibrium quantity of Brazilian reals, if D₁ and S₁ are the relevant demand and supply curves for Brazilian reals in this market.
A) 10 pesos per real and a quantity of 150 reals 
B) 6 pesos per real and a quantity of 250 reals 
C) 8 pesos per real and a quantity of 150 reals 
D) 8 pesos per real and a quantity of 250 reals 
E) 6 pesos per real and a quantity of 200 reals

Quizplus · Accepted Answer

The equilibrium exchange rate and quantity are determined by the intersection of the demand curve (D₁) and the supply curve (S₁) for Brazilian reals. Choice D correctly identifies the equilibrium exchange rate as 8 pesos per real and the equilibrium quantity as 250 reals, assuming this is where D₁ and S₁ intersect.

The Figure Given Below Depicts the Demand and Supply of Brazilian