Figure 151 Shows the Market for the Swiss Franc

Multiple Choice

Figure 15.1 shows the market for the Swiss franc. In the figure, the initial demand for marks and supply of marks are depicted by D? and S? respectively.
Figure 15.1. The Market for the Swiss Franc

-Refer to Figure 15.1.Suppose the demand for francs increases from D? to D?.Under a fixed exchange rate system,the U.S.exchange stabilization fund could maintain a fixed exchange rate of $0.50 per franc by:

A) Selling francs for dollars on the foreign exchange market
B) Selling dollars for francs on the foreign exchange market
C) Decreasing U.S. exports, thus decreasing the supply of francs
D) Stimulating U.S. imports, thus increasing the demand for francs