The Figure Given Below Depicts the Demand and Supply of Brazilian

question 11

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. Suppose the initial equilibrium exchange rate is 10 pesos per real. A decrease in the Mexican demand for Brazilian coffee, other things equal, is most likely to result in a new equilibrium exchange rate of:

• A)6 pesos per real and an equilibrium quantity of 200 Brazilian reals.
• B)6 pesos per real and an equilibrium quantity of 250 Brazilian reals.
• C)8 pesos per real and an equilibrium quantity of 150 Brazilian reals.
• D)8 pesos per real and an equilibrium quantity of 100 Brazilian reals.
• E)10 pesos per real and an equilibrium quantity of 200 Brazilian reals.

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Definitions:

Subgoals

Intermediate objectives set as part of a strategy to achieve a larger goal, helping to organize efforts and measure progress.

Working Backwards

Working backwards is a problem-solving strategy that involves starting with the conclusion or desired outcome and then deducing the steps needed to reach that outcome.

Applied Geology

Applied geology is the practical application of geological principles and techniques to solve problems in everyday life, including engineering, environmental assessments, and natural resource management.

Divergent

Moving or extending in different directions from a common point; in thinking, it refers to exploring many possible solutions or ideas.