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Author Question: Refer to Figure 19-7. Which of the following is true? (Read 611 times)

burchfield96

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Question 1

Figure 19-7











Refer to Figure 19-7.  At what level should the Indian government peg its currency to the dollar to make U.S. imports cheaper in India?


◦ greater than $.02/rupee
◦ less than $.02/rupee
◦ equal to $.02/rupee
◦ $1/rupee

Question 2

Figure 19-7











Refer to Figure 19-7.  Which of the following is true?


◦ U.S. imports are more expensive at exchange rates greater than $.02/rupee than at the equilibrium exchange rate.
◦ The rupee is overvalued at exchange rates less than $.02/rupee.
◦ To achieve an exchange rate greater than $.02/rupee, the Reserve Bank of India must buy surplus dollars with rupees.
◦ Indian exports to the United States are more expensive at exchange rates greater than $.02/rupee than at the equilibrium exchange rate.


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Marked as best answer by burchfield96 on Mar 16, 2019

sultansheikh

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burchfield96

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sultansheikh

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