Thought it was a pretty good question: All else being equal, if the EU fixes its exchange rate at 0.9430 EUR/USD when the equilibrium exchange rate is 0.9420 EUR/USD, the effects on the supply of U.S. dollars relative to euros and the U.S. trade balance with the EU will be: a. A surplus of USD and trade surplus b. A surplus of USD and trade deficit c. A shortage of USD and a trade surplus
B. The Euro is cheap relative to the dollar (or at least relative to the equilibrium rate), so people offer $ and buy EUR (and european goods). This will lead to a trade deficit.
Interesting question. I’d say since EUR appreciated, demand for EUR is up, which means demand for USD is down, which translates to a surplus of USD. The weaker USD should lead to a trade surplus, since foreigners will buy US products cheaper. Choice A.
Is 0.9430 EUR/USD implying a depreciation, rather than an appreciation? hence it would be choice B as Willespierre has pointed out. You are getting more Eur per USD…
yep Choice “b” is correct. By fixing the exchange rate (expressed in euros per dollar) above the equilibrium rate, Euorland has set a price floor on the dollar. At this exchange rate, the dollar is overvalued, which makes the products in Euorland appear cheaper relative to products in the U.S. Therefore, the U.S. will most likely have a trade deficit with Euroland because imports from Euorland will be relatively cheaper than exports from the U.S.
The EU is devaluing the Euro which must be achieved by selling Euros and buying in the open market. This leads to an oversupply of Euros and a shortage of (compared to equilibrium levels). Only Option C works…I’m not sure about the trade surplus and I’m too lazy to think it through right now 
Ah, I see my mistake in the logic in the second half of the question. Thanks for clarifying it gents.
Dammit