Figure 30-7 -Refer to Figure 30-7.Under the Bretton Woods System of Exchange

question 27

Multiple Choice

Figure 30-7

-Refer to Figure 30-7.Under the Bretton Woods System of exchange rates,if the par exchange rate was $4 per pound in the figure above,then which of the following is true?

• A) The Bank of England would have to buy 0.7 million pounds per day with dollars.
• B) There is a shortage of pounds equal to 0.7 million.
• C) The Bank of England would have to sell 0.7 million pounds per day in exchange for dollars.
• D) The par exchange rate is below the equilibrium rate, causing a shortage of domestic currency.

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