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Question
Referring to Figure 2.2, an increase in the demand for British goods by the U.S. importers has led to pressure on the pound to appreciate against the dollar. If the Bank of England wants to maintain a peg of $2.0/pound, what currency should it sell and how much?
a. Pounds, 1 billion
b. Pounds, 2 billion
c. Dollars, 1 billion
d. Dollars, 2 billion
Answer
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