The Figure Given Below Illustrates the Market for British Pounds

Multiple Choice

The figure given below illustrates the market for British pounds. D_£ and S_£ are the demand and supply curves of the British pounds respectively. If the British government wants to peg the dollar per pound exchange rate at $2.50 per pound, what action would British monetary authorities have to undertake?

A) Sell 1 million pounds and buy 2.5 million dollars
B) Buy 1 million pounds and sell 1 million dollars
C) Buy 1 million pounds and sell 2.5 million dollars
D) Buy 6 million pounds and sell 12 million dollars