ZuoTi.Pro
Question

5. Fixed exchange rates Consider the exchange rate between the Moroccan dirham and the euro. Suppose the Moroccan government, which means At the official exchange rate of 1.25 dirham per euro, the euro is , and the Moroccan dirham is that MoroccansBlank #1 Undervalued or overvalued

Blank #2 Undervalued or overvalued

Blank #3 More or less

Blank #4 Surplus or Shortage

Blank #5 Revaluation or devaluation

Blank #6 Revaluation or devaluation

business   economics   
1 0
Add a comment Improve this question Transcribed image text
Next > < Previous
Sort answers by oldest

Homework Answers

Answer #1

As the Official rate is above the market rate of euro so this rate (1.25 per Dirham per euro) of euro is overvalued. A depreciation is needed to bring it back to market rate. The morrocan dirham is undervalued at this rate. Which means the morrocans pay more for european exports then they would with free floating exchange rate.

The Supply is more of euros than its demand at rate 1.25 so there is a surplus of euros at this rate.

if the rate is needed to bring down to 1 than euros must need a  devaluation and dirham must need a revaluation to bring it back.

0 0
Add a comment
Know the answer?
Add Answer to:
Blank #1 Undervalued or overvalued Blank #2 Undervalued or overvalued Blank #3 More or less Blank...
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions

  • 7. Fixed exchange rates Consider the exchange rate between the Saudi riyal and the euro. Suppose...

    7. Fixed exchange rates Consider the exchange rate between the Saudi riyal and the euro. Suppose the Saudi government and the Eurozone governments agree to fix the exchange rate at 2.5 riyal per euro, as shown by the grey line on the following graph Refer to the following graph when answering the questions that follow. 4.0 3.5 Supply of Euros 3.0 2.5 ш2.0 O 1.5 Demand for Euros 1.0 0.5 0 2 101214 16 QUANTITY OF EUROS (Billions) At the...

  • Consider the exchange rate between the Saudi riyal and the euro. Suppose the Saudi government and...

    Consider the exchange rate between the Saudi riyal and the euro. Suppose the Saudi government and the Eurozone governments agree to fix the exchange rate at 2.5 riyal per euro, as shown by the grey line on the following graph Refer to the following graph when answering the questions that follow 3.5 Supply of Euros 2 3.0 2.5 2.0 1.5 O 1.0 Demand for Euros 0.5 10 2 16 QUANTITY OF EUROS (Billions)

  • Options 1) is more than; equals; is less than 2 and 3) Overvalued; in equilibrium; undervalued...

    Options 1) is more than; equals; is less than 2 and 3) Overvalued; in equilibrium; undervalued 6. The Capital Asset Pricing Model and the security market line Wilson holds a portfolio that invests equally in three stocks (WA = WB = wc = 1/3). Each stock is described in the Stock Beta 0.5 1.0 2.0 Standard Deviation 23% 38% 45% Expected Return 7.5% 12.0% 14.0% C An analyst has used market- and firm-specific information to generate expected return estimates for...

  • Suppose that the euro is trading at $1.25 per euro in the foreign exchange market. Next,...

    Suppose that the euro is trading at $1.25 per euro in the foreign exchange market. Next, suppose that the exchange rate falls to $0.88 per euro, due to falling interest rates in the eurozone. The following graph shows the supply and demand curves for dollars in the foreign exchange market. On the following graph, shift either the supply curve for dollars or the demand curve for dollars to reflect the influence of "carry trade" (in isolation from other factors that...

  • Looking for 1) P/E ratio 2) Dividend yield 3)explanation either overvalued or undervalued

    looking for 1) P/E ratio 2) Dividend yield 3)explanation either overvalued or undervalued determine the P/E Ratios and Dividend Yields for the following company's as of March 5, 2019. Note if the market P/E Ratio average ranges between 20 - 25, are these corporations Overvalued, or Undervalued should you invest in them? you have $25,000 to invest in these companies and can invest these funds anyway you seem fit. Please note you do NOT have to invest the funds evenly;...

  • 8. Balance of payments and the foreign exchange market The following graph shows the market for...

    8. Balance of payments and the foreign exchange market The following graph shows the market for euros, which is initialy in equilibrium. Suppose an economic expansion in the United States leads to an increase in the incomes of American households, causing imports from Europe to rise On the graph, illustrate the effect of an economic expansion on the market for euros by shifting the appropriate curve or curves. On the graph, illustrate the effect of an economic expansion on the...

  • 7. Exchange-rate crisis Aa Aa The following graph shows the market for euros in terms of...

    7. Exchange-rate crisis Aa Aa The following graph shows the market for euros in terms of the Malaysian ringgit. The market is initially in equilibrium at two ringgit per euro and 4 billion euros traded per day. Suppose the ringgit falls in value, causing investors to sell their ringgit-denominated assets and to sell ringgit for euros in order to buy euro-denominated assets. As a result, the demand for euros shifts to the right, from D1 to D2 EXCHANGE RATE (Ringgit...

  • 5. Balance of payments and the foreign exchange market The following graph shows the market for...

    5. Balance of payments and the foreign exchange market The following graph shows the market for euros, which is initially in equilibrium. Suppose an economic expansion in Canada leads to an increase in the incomes of Canadian households, causing imports from Europe to rise. On the graph, illustrate the effect of an economic expansion on the market for euros by shifting the appropriate curve or curves. Note: Select and drag one or both of the curves to the desired position....

  • OPtions Blank 1: open, Closed Blank 2: 41.3%, 39.1%, 36.2%, 40.2% Blank 3: Surplus, Deifcit Blank...

    OPtions Blank 1: open, Closed Blank 2: 41.3%, 39.1%, 36.2%, 40.2% Blank 3: Surplus, Deifcit Blank 4: € 257 billion, € 316 billion, € 294 billion, € 251 billion Blank 5: 25.3%, 26.5%, 27.6%, 25.6% Suppose you have the following data from Germany's national income and product accounts Billions of Euros Gross national disposable income Personal consumption Investment Government consumption Imports of goods and services Exports of goods and services Factor service imports Factor service exports Unilateral transfers to other...

  • blank 1 reinvestment / repatriation / revaluation blank 2 reinvestment / repatriation / revaluation Although the...

    blank 1 reinvestment / repatriation / revaluation blank 2 reinvestment / repatriation / revaluation Although the same basic principles of capital budgeting apply to both foreign and domestic operations, there are some key differences. First, cash flow estimation is more complex for overseas investments. Most multinational firms set up separate subsidiaries for each foreign country in which they operate. The relevant cash flows for the parent company are the dividends and royalties paid by the subsidiaries to the parent, translated...

ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT