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Use the Graph Below to Answer Questions 9 - 12

Question 63

Multiple Choice

Use the graph below to answer questions 9 - 12.
Figure 1.1 Use the graph below to answer questions 9 - 12. Figure 1.1   -Refer to Figure 1.1.Suppose that the market for British pound is initially in equilibrium at point A with the exchange rate $2.00 per pound.Then the demand curve shifts to D<sub>2</sub>.If the British central bank wants to fix the exchange rate at $2.00/pound,they have to: A)  buy pound and sell dollar by the amount of Q<sub>3</sub> - Q<sub>1</sub>. B)  sell pound and buy dollar by the amount of Q<sub>3</sub> - Q<sub>1</sub>. C)  sell only pound by the amount of Q<sub>3</sub> - Q<sub>1 </sub>and leave dollar alone. D)  buy only pound by the amount of Q<sub>3</sub> - Q<sub>1 </sub>and leave dollar alone.
-Refer to Figure 1.1.Suppose that the market for British pound is initially in equilibrium at point A with the exchange rate $2.00 per pound.Then the demand curve shifts to D2.If the British central bank wants to fix the exchange rate at $2.00/pound,they have to:


A) buy pound and sell dollar by the amount of Q3 - Q1.
B) sell pound and buy dollar by the amount of Q3 - Q1.
C) sell only pound by the amount of Q3 - Q1 and leave dollar alone.
D) buy only pound by the amount of Q3 - Q1 and leave dollar alone.

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