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Question
Refer to Figure 2.3. Suppose that the U.K agreed to peg its currency against the U.S. dollar at $2.00 per pound during the Bretton Woods system. Assume that the U.S. increases its imports from the U.K. As a result, the Bank of England would have to:
a. let the British pound appreciates
b. let the British pound depreciates
c. sell pounds and buy dollars in foreign exchange market.
d. sell dollars and buy pounds in foreign exchange market.
Answer
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Related questions
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In foreign exchange forecasting, what is a good forecast?
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c. When the forecast is high.
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