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Consider the exchange rate between the Saudi riyal and the euro. Suppose the Saudi government and the Eurozone governments agree to fix the exchange
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 (ER) 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. EXCHANGE RATE (Riyal per euro) 4.0 3.5 3.0 Supply of Euros 2.5 2.0 1.5 1.0 0.5 0 0 2 4 6 8 10 ER Demand for Euros 12 14 16 QUANTITY OF EUROS (Billions) (?)
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