Refer to the Below Graph,which Shows a Change in the Demand

question 146

Multiple Choice

Refer to the below graph,which shows a change in the demand for dollars from D to D₁.Under a system of flexible exchange rates,the

• A) exchange rate will increase to ≤0.70 per dollar.
• B) exchange rate will increase to $0.70 per pound.
• C) shortage equal to ab would be met using international monetary reserves.
• D) payment deficit will cause changes in domestic price and income levels,shifting demand to the left,supply to the right,and re-establishing the original exchange rate.
• E) price of a dollar will fall to ≤0.50.

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