Refer to Figure 20.3 for the Following Questions

question 137

Multiple Choice

Refer to Figure 20.3 for the following questions.
Figure 20.3
-Suppose the graph in Figure 20.3 represents the market for the British pound under the Bretton Woods System.If the par exchange rate was set at 4 US dollars,

• A) a shortage of pounds will exist.
• B) the British central bank will have to buy pounds with US dollars.
• C) the pound will be undervalued versus the US dollar.
• D) the demand for pounds will be greater than the supply.