The Figure Given Below Depicts the Demand and Supply of Brazilian

question 29

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.The supply curves shown for Brazilian reals are based on:

• A)the supply of Brazilian goods in the international market.
• B)the Brazilian demand for Mexican products.
• C)the supply of Mexican pesos in the market.
• D)the Brazilian demand for Brazilian products.
• E)the Mexican demand for Brazilian products.