1. The following table shows the supply and demand schedules for the British pound: Quantity of Dollars Quantity of Pounds Supplied per Pound Pounds Demanded 50 $2.50 10 40 $2.00 20 30 $1.50 30 20 $1.00 40 10 $0.50 50 A. Please show the demand for and supply of British pound on a graph (please put the dollars per pound on the vertical axis and the quantity of pounds on the horizontal axis). Under a system of floating exchange rate, how much is the equilibrium exchange rate? (6 points) B. Suppose that U.S. consumers raise their imports from the U.K. (due to economic expansion and higher income in the U.S.), increasing demand for pounds in the foreign exchange market to finance their purchase from U.K., where the dollar depreciates from $1.5 per pound to $2 per pound (the pound appreciates), under floating exchange rate. Please show the new demand curve on the graph. Assume that monetary authorities fix the exchange rate at $1.5 per franc, how the U.S. exchange-stabilization fund would be used in this case to fix the exchange rate at 1.5 per franc? Please show the shift of the appropriate curve on the graph to make the intersection of the new curves at the fixed exchange rate. (7 points) C. Instead of scenario B, suppose that U.K. investors want to invest more in the U.S., buying more U.S. securities, and that they sell more pounds in exchange for dollars, increasing the supply of pounds in the foreign exchange market to finance their purchase of U.S. securities, where the dollar appreciates from $1.5 per pound to $1 per pound (the pound depreciates), under floating exchange rate. Please show the new supply curve on the graph. Assume that monetary authorities fix the exchange rate at $1.5 per franc, how the U.S. exchange-stabilization fund would be used in this case to fix the exchange rate at 1.5 per franc? Please show the shift of the appropriate curve on the graph to make the intersection of the new curves at the fixed exchange rate. (7 points)