Use the Graph Below to Answer Questions 17- 20

question 25

Multiple Choice

Use the graph below to answer questions 17- 20.
Figure 1.2
-Refer to Figure 1.2.Suppose that the market for euro is initially in equilibrium at point A with the exchange rate $2.00 per euro.Then the supply curve shifts to S₂.If the European central bank wants to fix the exchange rate at $2.00/euro,they have to:

• A) buy euro and sell dollar by the amount of Q₃ - Q₁.
• B) sell euro and buy dollar by the amount of Q₃ - Q₁.
• C) sell only euro by the amount of Q₃ - Q₁ and leave dollar alone.
• D) buy only euro by the amount of Q₃ - Q₁ and leave dollar alone.

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