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Macroeconomics 20th Edition by Campbell McConnell ,Stanley Brue ,Sean Flynn
Edition 20ISBN: 978-0077660772Macroeconomics 20th Edition by Campbell McConnell ,Stanley Brue ,Sean Flynn
Edition 20ISBN: 978-0077660772 Exercise 18
Diagram a market in which the equilibrium dollar price of 1 unit of fictitious currency zee (Z) is $5 (the exchange rate is $5 =Z1). Then show on your diagram a decline in the demand for zee. LO4
a. Referring to your diagram, discuss the adjustment options the United States would have in maintaining the exchange rate at $5 = Z1 under a fixed-exchange-rate system.
b. How would the U.S. balance-of-payments surplus that is caused by the decline in demand be resolved under a system of flexible exchange rates?
a. Referring to your diagram, discuss the adjustment options the United States would have in maintaining the exchange rate at $5 = Z1 under a fixed-exchange-rate system.
b. How would the U.S. balance-of-payments surplus that is caused by the decline in demand be resolved under a system of flexible exchange rates?
Explanation
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a.
In the exchange rate market, the equi...
Macroeconomics 20th Edition by Campbell McConnell ,Stanley Brue ,Sean Flynn
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