NOTE: X-AXIS IS QUANTITY OF EUROS AND Y-AXIS IS DOLLARS PER EURO.

a.what would be the equilibrium exchange rate?

b.Why might rapid economic growth in the United States, coupled with unchanged economic conditions in Europe, cause the demand curve for euros to shift to D₁while the supply curve remained unchanged?

c.If exchange rates were freely floating, what would happen to the exchange rate?Would the dollar have appreciated or depreciated?

d.If this had occurred during the Bretton Woods period, with a par value set at $0.50 per euro, would the U.S. government have been required to use its exchange-stabilization fund to buy euros or to sell euros in order to maintain this par value?Show this on the graph, and briefly explain.