Use the following graph, which shows a change in the demand for pounds from D to D', to answer the next question.
Under a system of fixed exchange rates, ________.
A. the price of a pound will increase to $3
B. the price of a dollar will increase to 3 pounds
C. the payment deficit will cause changes in price and income levels, which reestablishes the original exchange rate
D. the shortage equal to b?a would be met using international monetary reserves
Answer: D
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