Figure 30-4 -Refer to Figure 30-4. the Equilibrium Exchange Rate Is Originally

Multiple Choice

Figure 30-4
-Refer to Figure 30-4. The equilibrium exchange rate is originally at A, $3/pound. Suppose the British government pegs its currency at $4/pound. Speculators expect that the value of the pound will drop and this shifts the demand curve for pounds to D₂. If the government abandons the peg, the equilibrium exchange rate would be

A) $4/pound.
B) $3/pound.
C) $2/pound.
D) less than $2/pound.