The Figure Given Below Depicts the Demand and Supply of Brazilian

question 3

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 21.1 In the figure:
D₁ and D₂: Demand for Brazilian reals
S₁ and S₂: Supply of Brazilian reals
Refer to Figure 21.1.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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