The figure below shows the foreign exchange market. D£ is the nonofficial demand curve for pounds. S£ (Spring-summer) and S£ (Autumn-winter) are the nonofficial supply curves of pounds during the spring-summer and autumn-winter seasons, respectively. Assume that the British government is committed to maintaining a fixed exchange rate at $1.90 per pound. In the Spring-summer period, what type of intervention must British monetary authorities engage in?
A. Sell 10 billion pounds at $2.20
B. Buy 40 billion pounds at $2.20
C. Buy 20 billion pounds at $1.90
D. Sell 20 billion pounds at $1.90
Answer: D
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