Question: D 1 and S 1 represent the initial demand and supply curves. If the supply of British pounds in the foreign exchange market shifts to
D and S represent the initial demand and supply curves. If the supply of British pounds in the foreign exchange market shifts to S and the British government wants to fix the exchange rate at its initial level, then it should
Question options:
sell US dollars out of its reserves
buy US dollars to add to its reserves
sell British pounds in the foreign exchange market
buy British bonds in the open market
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