The following diagram shows the foreign exchange market for sterling.
If, being worried about the effect on exports and wishing to prevent the exchange rate from rising above $1.80, the Bank of England decides to intervene by using the reserves, which of the following would have the desired effect?
A) Buying pounds using reserves of an amount a- b
B) Selling dollars to a sterling value of a- b
C) Buying dollars into the reserves by selling pounds of an amount c- d
D) Selling dollars from the reserves of an amount c- d
Correct Answer:
Verified
Q16: All currencies other than the domestic currency
Q17: The supply curve for sterling on the
Q18: Which of the following would not shift
Q19: When the exchange rate falls this is
Q20: The following diagram shows the foreign exchange
Q22: The demand for pounds in the foreign
Q23: If the inflation rate falls in the
Q24: If the UK receives larger than expected
Q25: If there is a current account deficit
Q26: If the UK takes part in another
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