Refer to Figure 12

Question 35

Multiple Choice

Refer to Figure 12.4. To maintain the exchange rate $1.18 when demand is D₀ and supply S₁ the central bank must:

A) buy Q₁ - Q₂ US dollars.
B) sell Q₁ - Q₂ US dollars.
C) sell Q₂ - Q₃ US dollars.
D) do nothing.

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