The Figure Given Below Depicts the Foreign Exchange Market for British

Multiple Choice

The figure given below depicts the foreign exchange market for British pounds traded for U.S. dollars.Figure 22.2

-Refer to Figure 22.2. Suppose that the British central bank wishes to maintain a fixed exchange rate of £1 = $1.60. If supply decreases from S₁ to S₂, the bank must:

A) buy 25 pounds to shift the supply curve from S₂ to S₁.
B) buy 50 pounds to shift the supply curve from S₂ to S₁.
C) sell 75 pounds to shift the supply curve from S₂ to S₁.
D) buy 75 pounds to shift the supply curve from S₂ to S₁.
E) sell 10 pounds to shift the supply curve from S₂ to S₁.