The figure given below depicts the foreign exchange market for British pounds traded for U.S. dollars.Figure 22.2 -Refer to Figure 22.2. Suppose that the British central bank wishes to maintain a fixed exchange rate of £1 = $1.60. If supply decreases from S₁ to S₂, the bank must: A)buy 25 pounds to shift the supply curve from S₂ to S₁. B)buy 50 pounds to shift the supply curve from S₂ to S₁. C)sell 75 pounds to shift the supply curve from S₂ to S₁. D)buy 75 pounds to shift the supply curve from S₂ to S₁. E)sell 10 pounds to shift the supply curve from S₂ to S₁.

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The Answer of The figure given below depicts the foreign exchange market for British pounds traded for U.S. dollars.Figure 22.2 -Refer to Figure 22.2. Suppose that the British central bank wishes to maintain a fixed exchange rate of £1 = $1.60. If supply decreases from S₁ to S₂, the bank must: A)buy 25 pounds to shift the supply curve from S₂ to S₁. B)buy 50 pounds to shift the supply curve from S₂ to S₁. C)sell 75 pounds to shift the supply curve from S₂ to S₁. D)buy 75 pounds to shift the supply curve from S₂ to S₁. E)sell 10 pounds to shift the supply curve from S₂ to S₁.

The Figure Given Below Depicts the Foreign Exchange Market for British