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Author Question: Refer to Figure 19-10.Under the Bretton Woods System of exchange rates, if the par ... (Read 423 times)

a0266361136

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on: Mar 16, 2019

Question 1

Figure 19-8










Refer to Figure 19-8.  The equilibrium exchange rate is originally 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
2. If the European Central Bank abandons the peg, the equilibrium exchange rate would be


◦ $1.00/euro.
◦ $1.25/euro.
◦ $1.50/euro.
◦ $1.75/euro.

Question 2

Figure 19-10











Refer to Figure 19-10.  Under the Bretton Woods System of exchange rates, if the par exchange rate was $4 per pound in the figure above, then which of the following is true?


◦ The Bank of England would have to buy 0.7 million pounds per day with dollars.
◦ There is a shortage of pounds equal to 0.7 million.
◦ The Bank of England would have to sell 0.7 million pounds per day in exchange for dollars.
◦ The par exchange rate is below the equilibrium rate, causing a shortage of domestic currency.
Macroeconomics ¦ Hubbard, O'Brien ¦ 6th Edition
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Marked as best answer by a0266361136 on Mar 16, 2019

flannelavenger

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Reply #1 on: Mar 16, 2019
Lorsum iprem. Lorsus sur ipci. Lorsem sur iprem. Lorsum sur ipdi, lorsem sur ipci. Lorsum sur iprium, valum sur ipci et, vala sur ipci. Lorsem sur ipci, lorsa sur iprem. Valus sur ipdi. Lorsus sur iprium nunc, valem sur iprium. Valem sur ipdi. Lorsa sur iprium. Lorsum sur iprium. Valem sur ipdi. Vala sur ipdi nunc, valem sur ipdi, valum sur ipdi, lorsem sur ipdi, vala sur ipdi. Valem sur iprem nunc, lorsa sur iprium. Valum sur ipdi et, lorsus sur ipci. Valem sur iprem. Valem sur ipci. Lorsa sur iprium. Lorsem sur ipci, valus sur iprem. Lorsem sur iprem nunc, valus sur iprium.
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a0266361136

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Reply 2 on: Mar 16, 2019
Great answer, keep it coming :)

Sarahjh

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Reply 3 on: Yesterday
YES! Correct, THANKS for helping me on my review

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