The equilibrium exchange rate is 0.70 euros per dollar. At this exchange rate, the quantity demanded equals the quantity supplied and is $1.3 trillion a day. If the exchange rate is now 0.80 euros per dollar, then
A) there is a shortage of dollars and the exchange rate falls.
B) there is no change.
C) there is a surplus of dollars and the exchange rate falls.
D) there is a surplus of dollars and the exchange rate rises.
E) there is a shortage of dollars and the exchange rate rises.
C
Economics
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