Figure 19-4
-Refer to Figure 19-4.The equilibrium exchange rate is at A,$3/pound.Suppose the British government pegs its currency at $4/pound.At the pegged exchange rate

Question

Figure 19-4 
-Refer to Figure 19-4.The equilibrium exchange rate is at A,$3/pound.Suppose the British government pegs its currency at $4/pound.At the pegged exchange rate

Quizplus · Accepted Answer

At a pegged exchange rate of $4/pound, the quantity of pounds supplied exceeds the quantity of pounds demanded, resulting in a surplus of pounds. The specific quantities leading to a 400 million surplus are not provided in the text, but this outcome is consistent with how currency pegs above the equilibrium rate typically create a surplus of the pegged currency.

Figure 19-4 -Refer to Figure 19-4.The Equilibrium Exchange Rate Is at A,$3/pound.Suppose