Consider the market for euros. Suppose the exchange rate is ________ its equilibrium. This means that the quantity of euros ________ is greater than the quantity of euros ________ and the exchange rate will ________.
A) above; supplied; demanded; fall
B) below; supplied; demanded; rise
C) above; demanded; supplied; fall
D) below; demanded; supplied; fall

Question

Quizplus · Accepted Answer

When the exchange rate is above its equilibrium, the quantity of euros supplied is greater than the quantity of euros demanded, leading to a surplus of euros. This surplus puts downward pressure on the exchange rate, causing it to fall until equilibrium is reached.

Consider the Market for Euros