1.) Draw two graphs representing the foreign exchange market. Graph 1.1 that shows an official (fixed) exchange rate (label as eo) that is below the equilibrium exchange rate (label as ee) and Graph 1.2 that shows an official exchange rate that is above the equilibrium exchange rate. For both graphs, a.) indicate if there is a shortage or a surplus. b.) explain how the Central Bank will intervene using its international reserves to maintain the fixed exchange rate; c.) describe how this intervention will be recorded in the BOP Journal Entry 8 for submission: (Due date17 December 2021)1. Draw two graphs representing the foreign exchange market. Graphw1.1 that shows an official (fixed)exchange rate (label as e) that is below the equilibrium exchange rate (label as e.) and Graph W1.2 thatshows an official exchange rate is above the equilibrium exchange rate. For both graphs, a) indicate ifthere is a shortage or a surplus; b) explain how the Central Bank will intervene using its internationalreserves to maintain the fixed exchange rate; c) describe how this intervention will be recorded in theBOP.

Macroeconomics is a sub-part of economics that is used to understand, the policies and fiscal…

Answered: Journal Entry 8 for submission: (Due…

Principles of Economics (MindTap Course List)

8th Edition

ISBN:9781305585126

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter32: A Macroeconomic Theory Of The Open Economy

Section: Chapter Questions

Problem 3PA

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1.) Draw two graphs representing the foreign exchange market. Graph 1.1 that shows an official (fixed) exchange rate (label as eo) that is below the equilibrium exchange rate (label as ee) and Graph 1.2 that shows an official exchange rate that is above the equilibrium exchange rate. For both graphs, a.) indicate if there is a shortage or a surplus. b.) explain how the Central Bank will intervene using its international reserves to maintain the fixed exchange rate; c.) describe how this intervention will be recorded in the BOP

Journal Entry 8 for submission: (Due date17 December 2021)
1. Draw two graphs representing the foreign exchange market. Graphw1.1 that shows an official (fixed)
exchange rate (label as e) that is below the equilibrium exchange rate (label as e.) and Graph W1.2 that
shows an official exchange rate is above the equilibrium exchange rate. For both graphs, a) indicate if
there is a shortage or a surplus; b) explain how the Central Bank will intervene using its international
reserves to maintain the fixed exchange rate; c) describe how this intervention will be recorded in the
BOP.

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