Use the Graph Below to Answer Questions 9 - 12

question 14

Multiple Choice

Use the graph below to answer questions 9 - 12.
Figure 1.1
-Refer to Figure 1.1.Suppose that the market for British pound is initially in equilibrium at point A with the exchange rate $2.00 per pound.Then the demand curve shifts to D₂.If the British central bank wants to fix the exchange rate at $2.00/pound,they have to:

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

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Definitions:

Kilograms

A unit of mass in the metric system, equivalent to one thousand grams or approximately 2.20462 pounds.

Grams

Grams are a unit of mass in the metric system, equivalent to one-thousandth of a kilogram.

Tablespoons

A unit of volume measurement, typically used in cooking, equivalent to three teaspoons or about 15 milliliters.

Teaspoon

A unit of measure used in cooking, equivalent to about 5 milliliters, or a small spoon used for stirring and sipping.