The Figure Given Below Depicts the Demand and Supply of Brazilian

question 89

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

-Carlos Silva, a Colombian singer, goes on tour to the United States for one month, following high American demand for his live shows. Assuming that all the show's expenses are paid by the U.S. promoters, other things equal, the U.S. tour will bring about:

• A)a decreased supply of Colombian pesos in the foreign exchange market.
• B)an increased supply of American dollars in the foreign exchange market.
• C)an increased supply of Colombian pesos in the foreign exchange market.
• D)a decreased demand for Colombian pesos in the foreign exchange market.
• E)an increased demand for American dollars in the foreign exchange market.