The Figure Given Below Depicts the Equilibrium in the Foreign

question 31

Multiple Choice

The figure given below depicts the equilibrium in the foreign exchange market.?Figure 13.1

-Refer to Figure 13.1. If the current equilibrium exchange rate is E1 what action would the Fed have to take to achieve a target exchange rate of E2?

• A) Sell (Q₂ - Q₁) amount of U.S. dollars.
• B) Buy (Q₁ - Q₃) amount of U.S. dollars.
• C) Buy (Q₂ - Q₃) amount of U.S. dollars.
• D) Buy (Q₂ - Q₁) amount of U.S. dollars.
• E) Sell (Q₁ - Q₃) amount of U.S. dollars.

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Definitions:

Bedrock

The solid rock layer beneath surface soils or sediments, serving as a foundation for the Earth's landscape.

Moss

A small, flowerless green plant that typically grows in dense green clumps or mats, often in damp or shady locations.

Lichen

Symbiotic organisms comprised of a fungus and a photosynthetic partner (usually an alga or cyanobacteria) living together in a mutually beneficial relationship.

Carbon Cycle

The natural process of carbon being exchanged among the biosphere, pedosphere, geosphere, hydrosphere, and atmosphere of Earth, essential for life.