Answer to Question #42274 in Macroeconomics for Jennifer

Question

In the absence of government intervention, the equilibrium exchange rate would be ...?

At the official ringgit price of euros, there is a _____ equal to ____ market.

To maintain the official exchange rate of 6 ringgit per euro, the central bank in Malaysia uses _____.

Final exam in Aplia for Macroeconomics online. (:

Answer 1

In the absence of government intervention, the equilibrium exchange ratewould be created by the market in the intersection of demand and supply curves for the currency.

At the official ringgit price of euros, there is a shortage of euro currencyequal to sugnificant part of the market. To maintain the official exchange rate of 6 ringgit per euro, the centralbank in Malaysia uses selling of euro currency on the interbank market.