Figure 19-10 -Refer to Figure 19-10.Under the Bretton Woods System of Exchange

Multiple Choice

Figure 19-10
-Refer to Figure 19-10.Under the Bretton Woods System of exchange rates,if the par exchange rate was $4 per pound in the figure above,then which of the following is true?

A) The Bank of England would have to buy 0.7 million pounds per day with dollars.
B) There is a shortage of pounds equal to 0.7 million.
C) The Bank of England would have to sell 0.7 million pounds per day in exchange for dollars.
D) The par exchange rate is below the equilibrium rate,causing a shortage of domestic currency.