Figure 17.1 shows the effect on the exchange rate (U.S. dollars per euro) on the demand for

Question:

Figure 17.1 shows the effect on the (U.S. dollars per euro) on the demand for euros by U. S. residents. What would happen if the U.S. government tried to establish a fixed at X2 after demand shifted out to D2?

Exchange Rate
The value of one currency for the purpose of conversion to another. Exchange Rate means on any day, for purposes of determining the Dollar Equivalent of any currency other than Dollars, the rate at which such currency may be exchanged into Dollars...