The Figure Given Below Depicts the Demand and Supply of Brazilian

question 36

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 22.1 In the figure:
D₁ and D₂: Demand for Brazilian reals
S₁ and S₂: Supply of Brazilian reals
-Refer to Figure 22.1.Assume that the initial equilibrium exchange rate is 6 pesos per real.Other things remaining equal,an increase in the number of Brazilian tourists to Mexico is most likely to:

• A)keep the equilibrium exchange rate constant.
• B)shift the demand curve for pesos to the right.
• C)shift the supply curve of pesos to the left.
• D)shift the demand curve for pesos to the left.
• E)shift the supply curve of pesos to the right.

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Definitions:

Vertical Contracts

Arrangements between companies at different levels in the supply chain, such as manufacturers and retailers, to control the supply and price of products.

Benefits

Advantages or favorable outcomes resulting from specific actions, policies, or circumstances.

Promotional Activities

Efforts designed to inform, persuade, or remind potential buyers about a business's products or services, often to boost sales or brand awareness.

Free Ride

Benefit received without contributing to the cost of its production, often resulting in under-provision of goods or services if too many consumers opt to not pay.