-Refer to the Above Diagram Where D and S Are

question 99

Multiple Choice

-Refer to the above diagram where D and S are Canada's demand for and supply of Swiss francs.At the equilibrium exchange rate,E,Canada's balance of payments is in equilibrium.Given a change in demand from D to D' Canada could maintain the dollar price of francs by:

• A) shifting the S curve to the right through the use of domestic expansionary policies.
• B) instituting exchange controls to ration Ed francs to Canadian importers who want Ec francs.
• C) using international monetary reserves to cover the Ec shortage of francs.
• D) using international monetary reserves to cover the cd shortage of francs.