Figure 30-4 -Refer to Figure 30-4. the Equilibrium Exchange Rate Is at Rate

question 188

Multiple Choice

Figure 30-4
-Refer to Figure 30-4. The equilibrium exchange rate is at A, $3/pound. Suppose the British government pegs its currency at $4/pound. At the pegged exchange rate

• A) there is a shortage of pounds equal to 600 million.
• B) there is a surplus of pounds equal to 400 million.
• C) there is a shortage of pounds equal to 400 million.
• D) there is a surplus of pounds equal to 600 million.
• E) there is a shortage of pounds equal to 200 million.

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