Exhibit 35-4 Refer to Exhibit 35-4. Under a fixed exchange rate system, at the exchange rate of E 3, the dollar is __________ an
d there is a __________.
1 answer:
Please find diagram for question attached
Question options:
a.
overvalued; surplus of dollars
b.
undervalued; shortage of pesos
c.
overvalued; shortage of dollars
d.
undervalued; surplus of pesos
Answer:
Overvalued and there is a shortage of dollars
Explanation:
An increase in dollar price to buy peso means that dollar here is overvalued as it is above the equilibrium price(E2),and therefore it would be expensive to buy goods that are sold for a certain amount of dollars or in dollar currency with the Mexican pesos. This is because the fixed exchange rate system tries to ensure smooth and inexpensive trade between countries as it has to do with currency trading barriers by pegging a currency to another(in this case dollars) but here the dollar price increase for peso makes it more expensive to buy dollar products with pesos. Also this is caused here by the shortage of dollars.
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Answer:
probability = 0.008
probability = 0.0256
Explanation:
we know here probability of defective is 0.2
so probability of not defective is 1 - 0.2 = 0.8
as we know 3 item is arrive off process line in succession
so The probability that an item is defective is
as P(defective) = 0.20
as all item are independent so
probability that all three items are defective is
probability = 0.20 × 0.20 × 0.20 = 0.008
and
probability that exactly 3 of next 4 are defective
so number of way that can choose 3 out of 4 is
=
= 4
so as all are independent probability is
probability = ( the number of way to choose 3 out of 4 ) × ( 3 item defective ) × ( 1 item not defective )
probability = × 0.2³ × ( 1- 0.2)
probability = 4 × 0.008 × 0.8
probability = 0.0256