On the graph, use the purple point (diamond symbol) to indicate the new equilibrium exchange rate and quantity under a system of flexible exchange rates. Under a system of flexible exchange rates, the dollar will until the foreign exchange market reaches an equilibrium exchange rate of Now suppose that the United States wants to maintain the initial equilibrium exchange rate of $1 per Guro. On the graph, use a grey point (star symbol) to indicate the new equilibrium under a system of fixed exchange rates. Under system of fixed exchange rates, which of the following policies could the U.S. government use to prevent the change in demand for euros from driving the exchange rate to the new equilibrium? Check all that apply. Sell U.S. euro reserves in the foreign exchange market Lower interest rates by way of monetary policy Reduce income taxes in the United States7. Balance of payments and the foreign exchange market The following graph shows the market for euros, which is initially in equilibrium. Suppose an economic downtum in the United States leads to a drop in American incomes, causing imports from Europe to decline. On the graph, Wustrate the effect of an economic downturn on the market for euros by shifting the appropriate curve of curves. EXCHANGE RATE Dolan permut On the graph, use the purple point (diamond symbol) to indicate the new equilibrium exchange rate and quantity under a system of fexible exchange rates. Under a system of flexible exchange rates, the dollar will until the foreign exchange market reaches an equilibrium exchange rate of Now suppose that the United States wants to maintain the initial equilibrium exchange rate of $1 per ouro. On the graph, use a grey point (star symbol) to indicate the new equilibrium under a system of fixed exchange rates. Under system of fixed exchange rates, which of the following policies could the U.S. government use to prevent the change in demand for euros from driving the exchange rate to the new