If the dollar is overvalued against the peso, it implies that:
A) the exchange rate between the dollar and the peso is flexible.
B) the quantity of dollar supplied in exchange of pesos equals the quantity of dollars demanded in exchange of pesos in the foreign exchange market.
C) the quantity of dollar supplied in exchange of pesos exceeds the quantity of dollars demanded in exchange of pesos in the foreign exchange market.
D) the quantity of dollar supplied in exchange of pesos is less than the quantity of dollars demanded in exchange of pesos in the foreign exchange market.
C
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If interest rates rise in the United States and remain the same in the South Pacific, then what can we expect to occur in the foreign exchange market for yaps (South Pacific currency)?
a. nothing b. an increase in its equilibrium price c. a decrease in its equilibrium price d. a shift in the supply of yaps e. an increase in the equilibrium quantity of yaps
Which of the following is not held constant in a supply schedule?
a. production technology b. the price of the good c. the prices of inputs d. expectations