The Figure Given Below Depicts the Demand and Supply of Brazilian

question 1

Multiple Choice

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. The supply curves shown for Brazilian reals are based on:

• A) the supply of Brazilian goods in the international market.
• B) the Brazilian demand for Mexican products.
• C) the supply of Mexican pesos in the market.
• D) the Brazilian demand for Brazilian products.
• E) the Mexican demand for Brazilian products.

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