Suppose that the fixed exchange between the euro and the dollar (LaTeX: \frac{dollar}{euro}d o l l a r e u r o) has been set at 1.5 by the European Central Bank (ECB). The equilibrium exchange rate is 1. Suppose that the quantity of euros supplied is 450,000 while the quantity demanded is 50,000 at the fixed exchange rate of 1.5. Question: What does it cost the ECB to purchase the excess euros in the foreign exchange market
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Suppose that the fixed exchange between the euro and the dollar (LaTeX: \frac{dollar}{euro}d o l l a...
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