The Figure Given Below Depicts the Foreign Exchange Market for British

question 69

Multiple Choice

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 the British central bank is committed to maintaining an exchange rate of £1 = $1.50, but there is a permanent shift in supply from S₁ to S₃. According to the Bretton Woods agreement:

• A)the pound should be devalued.
• B)the dollar should be devalued.
• C)the British central bank should buy pounds in exchange for dollars.
• D)the British central bank should encourage speculation.
• E)the Fed should intervene to maintain the exchange rate of £1 = $1.

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Definitions:

Motivation

The process that initiates, guides, and maintains goal-oriented behaviors.

Behavior

The actions or reactions of an organism, often in relation to its environment, which can be observable and measurable.

Arousal Theory

A theory in psychology that suggests people are motivated to maintain an optimal level of arousal, not too high or too low, for their personal best performance.

Excitement

A feeling of great enthusiasm and eagerness, often accompanied by physiological signs such as increased heart rate and heightened senses.