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13 . Fixed exchange rates Consider the exchange rate between the Moroccan dirham and the euro. Suppose the Moroccan government and the eurozone governments agree

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13 . Fixed exchange rates Consider the exchange rate between the Moroccan dirham and the euro. Suppose the Moroccan government and the eurozone governments agree to fix the exchange rate (ER) at 2.5 dirham 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 EXCHANGE RATE (Dirham per euro) 3.0 ER 2.5 2.0 1.5 1.0 Demand for Euros 0.5 2 10 12 14 16 QUANTITY OF EUROS (Billions)

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