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The demand for and supply of Singapore dollars in the foreign exchange market are: Demand = 1,450 - 400e Supply = 750 + 600e where
The demand for and supply of Singapore dollars in the foreign exchange market are: Demand = 1,450 - 400e Supply = 750 + 600e where the nominal exchange rate, e, is expressed as Euro per Singapore dollar (SGD). a. What is the equilibrium exchange rate of the Singapore dollar if Singapore adopts a flexible exchange rate regime? b. Illustrate with an exchange rate diagram to show the effects on the foreign exchange market in its net export when the Monetary Authority of Singapore (central bank) decides to fix the exchange rate at 0.60Euro/SGD. c. From your answer in (b), explain if it will improve the balance of payment assuming there is an initial trade deficit
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