-Referring to Figure 2.1,the pound per dollar exchange rate starts at 2.00.Assume that an increase in the taste for U.S.imports by U.K.residents leads to a shift in the supply of pounds.If the Bank of England wishes to intervene by buying pounds to restore the peg of $2.0/pound,what distance represents that intervention?

Question

Quizplus · Accepted Answer

The Bank of England would need to buy pounds to restore the peg of $2.0/pound. This would shift the supply of pounds to the right, from A to B.