The demand for the Franconian franc in the foreign exchange market equals 11,000 - 25,000e and the supply of francs in the foreign exchange market equals 9,000 + 25,000 e, where e is the nominal exchange rate expressed in U.S. dollars per franc. If the franc is fixed at 0.25 U.S. dollars per franc, then the franc is ________ and Franconia has a balance-of-payments ________.
A. overvalued; surplus of 10,500 francs
B. overvalued; deficit of 10,500 francs
C. undervalued; surplus of 10,500 dollars
D. undervalued; deficit of 10,500 francs
Answer: B
You might also like to view...
The percentage of American families with incomes below the poverty line was ________ in 1960 and ________ in 2010
A) 10.1%; 10.7% B) 8.7%; 13.9% C) 18.1%; 11.8% D) 26.8%; 48.3%
Bond prices and bond yields have a(n) ______________ relationship.
A. direct B. inverse C. independent D. positive
If the price of margarine falls, the demand for butter will
A) remain unchanged. B) increase. C) decrease. D) rise at first and then fall.
A business incurs the following costs per unit: Labor $5/unit; Materials $3/unit and rent $5000/month. If the firm produces 1000 units a month, the total variable costs equals
a. $5,000 b. $8,000 c. $13,000 d. $10,000