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Title: Refer to Figure 19-1. Which of the following would cause the change depicted in the figure above?
Post by: Zoey63294 on Mar 16, 2019

Question 1

Figure 19-9









Refer to Figure 19-9. According to the graph, is there a surplus or shortage of Saudi Arabian riyal in exchange for U.S. dollars? To maintain the pegged exchange rate, will the Saudi central bank need to buy riyal in exchange for dollars or sell riyal in exchange for dollars? How many riyal will the Saudi central bank need to buy or sell?

Question 2

Figure 19-1











Refer to Figure 19-1.  Which of the following would cause the change depicted in the figure above?

◦ U.S. productivity rises relative to European productivity.
◦ Europeans decrease their preferences for U.S. goods relative to European goods.
◦ The European Union increases its quotas on U.S.-produced wine.
◦ an increase in the price level of U.S. goods relative to European goods

Title: Refer to Figure 19-1. Which of the following would cause the change depicted in the figure above?
Post by: IAPPLET on Mar 16, 2019

Answer 1

There is a surplus of riyal in exchange for U.S. dollars, because at the pegged exchange rate the quantity of riyal demanded is less than the quantity of riyal supplied. To maintain the pegged exchange rate, the Saudi central bank will have to buy riyal in exchange for dollars. The Saudi central bank will have to buy 70 million riyal per day.

Answer 2

U.S. productivity rises relative to European productivity.