Suppose That the Current Equilibrium Exchange Rate Between the United

question 14

Essay

Suppose that the current equilibrium exchange rate between the United States (US)dollar and Philippine peso is $0.20 per peso. The Philippine government pegged the peso to the US dollar at the rate of $0.25 per peso. Draw the market demand and supply curve of pesos for US dollars. Would the Philippine central bank have to buy or sell pesos to maintain the peg? Show on the diagram how many pesos would be bought and sold.
_____________________________________________________________________________________________
_____________________________________________________________________________________________

---

Definitions:

Controllable Margin

The portion of profit or loss that can be directly controlled or influenced by management decisions.

Average Assets

The average value of a company's assets over a specific period of time, used in calculating metrics such as return on average assets (ROAA).

ROI

Return on Investment, a measure used to evaluate the efficiency of an investment or to compare the efficiencies of several different investments.

Controllable Margin

The portion of income that can be directly controlled or influenced by management decisions, often excluding fixed costs.