The Demand for the Franconian Franc in the Foreign Exchange

Multiple Choice

The demand for the Franconian franc in the foreign exchange market equals 14,000 - 3,000e and the supply of francs in the foreign exchange market equals 2,000 + 2,000e, where e is the nominal exchange rate expressed in U.S. dollars per franc. If the franc is fixed at 2 U.S. dollars per franc, then to maintain this fixed rate Franconia's international reserves must:

A) decrease by 2,000 francs per period.
B) increase by 4,000 francs per period.
C) decrease by 4,000 francs per period.
D) increase by 2,000 francs per period.