(Solved): Consider the exchange rate between the Malaysian ringgit and the euro. Suppose the Malaysian gove ...

Consider the exchange rate between the Malaysian ringgit and the euro. Suppose the Malaysian government and the Eurozone governments agree to fix the exchange rate (ER) at 0.5 ringgit per euro, as shown by the grey line on the following graph. Refer to the following graph when answering the questions that follow. At the official exchange rate of 0.5 ringgit per euro, the euro is , and the Malaysian ringgit is , which means that Malaysians pay for European exports than they would with a free-floating exchange rate. At the official ringgit price of euros, there is a of euros in the foreign exchange market. Suppose the governments of the Eurozone and Malaysia reevaluate their currencies so that their official exchange rate is now 1 ringgit per 1 euro. This action results in of the euro.