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 or 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 .