121620242832QUANTITY OF EUROS (Billions)At the official exchange rate of 2.5 dirham per euro, the euro isand the Moroccan dirham is,which meansthat Moroccans pay▼ for European exports than they would with a free-floating exchange rate.At the official dirham price of euros, there is aof euros in the foreign exchange market.Suppose the governments in the Eurozone and Morocco agree to change the official exchange rate from 2.5 dirham per euro to 2 dirham per euro. Theaction represents aof the euro and av of the dirham.Grade It NowSavel: ContinueContinue without savingMacBook AirF8F7D00 F4F6F5F3F2&%23%248.9.%24 3. Fixed exchange ratesConsider the exchange rate between the Moroccan dirham and the euro. Suppose the Moroccan government and the Eurozone governments agree tofix the exchange rate at 2.5 dirham per euro, as shown by the grey line on the following graph.Refer to the following graph when answering the questions that follow.4.03.5Supply of Euros3.02.52.01.5Demand for Euros1.00.51216202428320.4.8QUANTITY OF EUROS (Billions)EXCHANGE RATE (Dirham per euro)

Exchange rate: It can be defined as the rate at which the value of the domestic countries currency…

QUANTITY OF EUROS (Billions) At the official exchange rate of 2.5 dirham per euro, the euro is and the Moroccan dirham is which means that Moroccans pay v for European exports than they would with a free-floating exchange rate. At the official dirham price of euros, there is a of euros in the foreign exchange market. Suppose the governments in the Eurozone and Morocco agree to change the official exchange rate from 2.5 dirham per euro to 2 dirham per euro. The action represents a of the euro and a v of the dirham. Grade It Now Save Continue

QUANTITY OF EUROS (Billions) At the official exchange rate of 2.5 dirham per euro, the euro is and the Moroccan dirham is which means that Moroccans pay v for European exports than they would with a free-floating exchange rate. At the official dirham price of euros, there is a of euros in the foreign exchange market. Suppose the governments in the Eurozone and Morocco agree to change the official exchange rate from 2.5 dirham per euro to 2 dirham per euro. The action represents a of the euro and a v of the dirham. Grade It Now Save Continue

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

12
16
20
24
28
32
QUANTITY OF EUROS (Billions)
At the official exchange rate of 2.5 dirham per euro, the euro is
and the Moroccan dirham is
,which means
that Moroccans pay
▼ for European exports than they would with a free-floating exchange rate.
At the official dirham price of euros, there is a
of euros in the foreign exchange market.
Suppose the governments in the Eurozone and Morocco agree to change the official exchange rate from 2.5 dirham per euro to 2 dirham per euro. The
action represents a
of the euro and a
v of the dirham.
Grade It Now
Savel: Continue
Continue without saving
MacBook Air
F8
F7
D00 F4
F6
F5
F3
F2
&
%23
%24
8.
9.
%24

3. Fixed exchange rates
Consider the exchange rate between the Moroccan dirham and the euro. Suppose the Moroccan government and the Eurozone governments agree to
fix the exchange rate at 2.5 dirham per euro, as shown by the grey line on the following graph.
Refer to the following graph when answering the questions that follow.
4.0
3.5
Supply of Euros
3.0
2.5
2.0
1.5
Demand for Euros
1.0
0.5
12
16
20
24
28
32
0.
4.
8
QUANTITY OF EUROS (Billions)
EXCHANGE RATE (Dirham per euro)

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Price per euro P₂ P₁ Po Qo Q₁ Q₂ Q3 1) the excess demand of euro equal to Q3 - Q1. In the above figure, suppose the value of the European euro is P₁ and U.S. demand for French wine declines. The effect on the franc can be shown by S 3) the decrease in the value of the euro to Po. Quantity of euros 2) a shift in the demand for euros from D₁ to Do, but no change in the value of the euro. 4) an increase in the value of the euro to P2.
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