The Following Figure Shows the Equilibrium in the Foreign Exchange

question 82

Multiple Choice

The following figure shows the equilibrium in the foreign exchange market where dollars are exchanged for yuan.

-Refer to the figure above.If the yuan is allowed to float,at exchange rates below E yuan per dollar,________ the value of the dollar in the foreign exchange market.

• A) the excess demand for dollars in exchange for yuan increases
• B) the excess demand for dollars in exchange for yuan lowers
• C) the excess supply of dollars in exchange for yuan increases
• D) the excess supply of dollars in exchange for yuan lowers

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Definitions:

Owner's Equity

Owner's equity represents the owner's stakes or claims against the assets of a business, equal to the total assets minus total liabilities.

Liabilities

Financial obligations or debts that a business or individual owes to others, which are expected to be settled over time through the transfer of economic benefits like cash or goods.

Assets

Resources owned or controlled by a business that are expected to benefit future operations.

Accounting Equation

The foundational equation in accounting, Assets = Liabilities + Owner's Equity, showing the relationship between a company's assets, liabilities, and equity.