Use the following graph, which shows the supply and demand curves for dollars in the pound/dollar market, to answer the next question.
Assume that D1 and S1 represent the initial demand for and supply of dollars. The exchange rate at this equilibrium would be ________.
A. $0.20 = 1 pound
B. $4 = 1 pound
C. $1 = 5 pounds
D. $5 = 1 pound
Answer: D
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