Figure 159 Alt Text for Figure 15

question 166

Multiple Choice

Figure 15.9 Alt text for Figure 15.9: In figure 15.9, a graph illustrates the quantity of euros traded against the exchange rate.
Long description for Figure 15.9: The x-axis is labelled, quantity of euros traded in millions per day.The y-axis is labelled, exchange rate, Canadian dollar against the euro.A straight line supply curve, S, slopes up from the bottom left corner to the top right corner.2 straight line demand curves, D1 and D2, slope down from the top left corner to the bottom right corner.Curve D2 is plotted to the right of curve D1.The difference between the curves is indicated by a right pointing arrow.Curve S intersects curves D1 and D2 at points A (500, 1.25) and B (700, 1.50) .Point (200, 1.00) is plotted near the bottom of curve S.Point (950, 1.75) is plotted near the top of curve S.Point (500, 1.75) is plotted near the top of curve D2.Points (900, 1.25) and point (1,000, 1.00) are plotted near the bottom of curve D2.Point (200,1.75) is plotted near the top of curve D1.Point (700, 1.00) is plotted near the bottom of curve D1.All points are connected to their corresponding values on the x and y-axes with dotted lines.
-Refer to Figure 15.9.The equilibrium exchange rate is at A, $1.25/euro.Suppose the European Central Bank pegs its currency at $1.00/euro.Speculators expect that the value of the euro will rise, and this shifts the demand curve for euros to D₂.After the shift,

• A)there is a shortage of euros equal to 1,000 million.
• B)there is a surplus of euros equal to 400 million.
• C)there is a shortage of euros equal to 800 million.
• D)there is a surplus of euros equal to 500 million.
• E)there is a short of euros equal to 400 million.

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Definitions:

Accurate in Reality

Being true or correct in conformity with the actual state of things or conditions.

Case Study Method

A research method that involves the intensive examination of an individual or group to draw conclusions about a larger principle or phenomena.

Restricted Sample

A sample limited to specific criteria, often used in research to focus on a particular group or aspect.

Dream Analysis

A therapeutic technique best known in psychoanalysis where dreams are interpreted to uncover underlying motives and desires.