Question: (06.04 HC) Use the graph to answer the question that follows. A foreign exchange market graph. The horizontal axis is labeled Quantity of Pesos. The

(06.04 HC) Use the graph to answer the question that follows. A foreign exchange market graph. The horizontal axis is labeled Quantity of Pesos. The vertical axis is labeled Dollars per Peso. There are three straight lines on the graph, D0, D1, and S0. Lines D0 and D1 are parallel to each other, downward sloping lines from left to right with D0 above D1. Line S0 below where Line D1 begins, moving up diagonally, intersecting D1 and then D0. Dashed lines come from the intersection of D0 and S0, as well as D1 and S0, each of the four dashed lines running perpendicular the x axis or y axis. The shift from D0 to D1 could be the result if the United States Federal Reserve (3 points) sells government bonds purchases government bonds increases the money supply decreases the required reserve ratio reduces the federal discount rate

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