Refer to the figure above. If the exchange rate is fixed below E yuan per dollar:
A) the dollar is overvalued and the yuan is undervalued.
B) both the yuan and dollar are undervalued.
C) the dollar is undervalued and the yuan is overvalued.
D) both the yuan and dollar are overvalued.
C
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A shift of the supply curve of DVDs raises the price of a DVD from $9.50 to $10.50 a DVD and reduces the quantity demanded from 41 million to 39 million DVDs a month. The price elasticity of demand for DVDs is
A) 2 million DVDs a month per dollar. B) $1 per 2 million barrels a day. C) 0.5. D) 2.0.
The cross-price elasticity of demand for peanut butter with respect to the price of jelly is -0.3. If we expect the price of jelly to decline by 15%, what is the expected change in the quantity demanded for peanut butter?
A) +15% B) +45% C) +4.5% D) -4.5%