Figure 30-8 
-Refer to Figure 30-8. The equilibrium exchange rate is at A, $1.25/euro. Suppose the European Central Bank pegs its currency at $1.00/euro. Speculators expect that the value of the euro will rise and this shifts the demand curve for euro to D2. After the shift,
A) there is a shortage of euro equal to 1,000 million.
B) there is a surplus of euro equal to 400 million.
C) there is a shortage of euro equal to 800 million.
D) there is a surplus of euro equal to 500 million.
Correct Answer:
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