The demand for and supply of shekels in the foreign exchange market are:

Demand = 50,000 35,000e

Supply = 38,000 + 65,000e

where the nominal exchange rate (e) is expressed as U.S. dollars per shekel.

a. The fundamental value of the shekel is ___ dollars per shekel.

b. If the shekel is fixed at 0.15 U.S. dollars, then the shekel is (Click to select) undervalued, neither overvalued nor undervalued, overvalued, either overvalued or undervalued; and there is a balance-of-payments (Click to select) balance, deficit, account, surplus of shekels; U.S. dollars.

Over time, the countrys international reserves will (Click to select) decrease, either increase or decrease, stay the same, increase; .

c. If the shekel is fixed at 0.09 U.S. dollars, then the shekel is (Click to select) overvalued, either overvalued or undervalued, undervalued, neither overvalued nor undervalued; and there is a balance-of-payments (Click to select) deficit, balance, surplus, account; of shekels or U.S. dollars.

Over time, the countrys international reserves will (Click to select) increase, stay the same, decrease, either increase or decrease; .