The Figure Given Below Depicts the Equilibrium in the Foreign

question 76

Multiple Choice

The figure given below depicts the equilibrium in the foreign exchange market. Figure 13.1 Refer to Figure 13.1.If the current equilibrium exchange rate is E₁ what action would the Fed have to take to achieve a target exchange rate of E₂?

• A)Sell (Q₂ - Q₁)amount of U.S.dollars.
• B)Buy (Q₁ - Q₃)amount of U.S.dollars.
• C)Buy (Q₂ - Q₃)amount of U.S.dollars.
• D)Buy (Q₂ - Q₁)amount of U.S.dollars.
• E)Sell (Q₁ - Q₃)amount of U.S.dollars.

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