Figure 15.4 Alt text for Figure 15.4: In figure 15.4, a graph illustrates the quantity of pounds traded against the exchange rate.
Long description for Figure 15.4: The x-axis is labelled, quantity of pounds traded in millions per day.The y-axis is labelled, exchange rate, Canadian dollar against the pound.A straight line supply curve, S, slopes up from the middle left to the top right corner.2 straight line demand curves, D1 and D2, have 2 slightly different slopes.Both curves slope down from the top left corner to the bottom right corner.Curve D2 is plotted to the left of curve D1.The difference between the curves is indicated by a left pointing arrow.Curve S intersects curves D1 and D2 at points A (500, 3.00)and B (300, 2.00).Point (300, 4.00)is plotted near the top of curve D1, and point (100, 4.00)is plotted near the top of curve D2.All points are connected to their corresponding values on the x and y-axes with dotted lines.
-Refer to Figure 15.4.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 15.4  Alt text for Figure 15.4: In figure 15.4, a graph illustrates the quantity of pounds traded against the exchange rate.
Long description for Figure 15.4: The x-axis is labelled, quantity of pounds traded in millions per day.The y-axis is labelled, exchange rate, Canadian dollar against the pound.A straight line supply curve, S, slopes up from the middle left to the top right corner.2 straight line demand curves, D1 and D2, have 2 slightly different slopes.Both curves slope down from the top left corner to the bottom right corner.Curve D2 is plotted to the left of curve D1.The difference between the curves is indicated by a left pointing arrow.Curve S intersects curves D1 and D2 at points A (500, 3.00)and B (300, 2.00).Point (300, 4.00)is plotted near the top of curve D1, and point (100, 4.00)is plotted near the top of curve D2.All points are connected to their corresponding values on the x and y-axes with dotted lines.
-Refer to Figure 15.4.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 the 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 surplus amount (400 million) is determined by the difference between the quantity supplied and the quantity demanded at the pegged rate.

Figure 154 Alt Text for Figure 15