The figure given below depicts the demand and supply of Brazilian reals in the foreign exchange market. Assume that the market operates under a flexible exchange rate regime.?Figure 21.1??In the figure:?D₁ and D₂: Demand for Brazilian reals?S₁ and S₂: Supply of Brazilian reals
-Refer to Figure 21.1. If the initial equilibrium exchange rate is 6 pesos per real, then other things equal, a decrease in the number of Brazilian tourists to Mexico would:
A) increase the demand for Brazilian reals from D₂ to D₁ and increase the exchange rate to 8 pesos per real.
B) decrease the supply of Brazilian reals from S₁ to S₂ and increase the exchange rate to 8 pesos per real.
C) decrease the supply of Brazilian reals from S₁ to S₂ and increase the exchange rate to 10 pesos per real.
D) decrease the demand for Brazilian reals from D₁ to D₂ and increase the exchange rate to 8 pesos per real.
E) decrease the supply of Brazilian reals from S₁ to S₂ and increase the demand for Brazilian reals from D₂ to D₁, thereby changing the exchanging rate to 10 pesos per real.
Correct Answer:
Verified
Q44: The figure given below depicts the demand
Q44: The figure given below depicts the foreign
Q46: The figure given below depicts the foreign
Q47: The figure given below depicts the demand
Q51: The figure given below depicts the foreign
Q59: The figure given below depicts the foreign
Q59: Under the flexible exchange rate system,when a
Q59: The figure given below depicts the foreign
Q65: The figure given below depicts the foreign
Q68: The figure given below depicts the foreign
Unlock this Answer For Free Now!
View this answer and more for free by performing one of the following actions
Scan the QR code to install the App and get 2 free unlocks
Unlock quizzes for free by uploading documents