The Figure Given Below Depicts the Equilibrium Exchange Rate Between

question 79

Multiple Choice

The figure given below depicts the equilibrium exchange rate between the U.S dollar and the Mexican peso. Figure 13.2 Refer to Figure 13.2.Assume that the exchange rate is fixed at MXP 11 = $1 and the free market equilibrium rate is MXP 10 = $1.This means that at MXP 11 = $1,

• A)there will be a permanent shortage of U.S.dollars.
• B)there will be a surplus of Mexican pesos.
• C)there will be a permanent surplus of U.S.dollars.
• D)U.S.net exports to Mexico will be positive.
• E)the U.S.budget deficit will fall.

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Definitions:

Community Property

A form of joint property ownership typically between spouses, where assets acquired during the marriage are owned equally by both parties.

Joint Tenancy

is a form of property ownership by two or more persons where each owns an undivided interest, and upon death, the survivor(s) automatically assumes ownership of the deceased's share.

Inheritable Tenancy

A type of tenancy that allows the tenant's rights in the property to be passed on to their heirs.

Community Property

A legal concept in certain jurisdictions that property acquired during marriage is owned jointly by both spouses.