Refer to Figure above: Suppose that the market for euro is initially in equilibrium at point A with the exchange rate $2.00 per euro. Then the supply curve shifts to S2. If the European central bank wants to fix the exchange rate at $2.00/euro, they have to:

a. buy euro and sell dollar by the amount of Q3 Q1.

b. sell euro and buy dollar by the amount of Q3 Q1.

c. sell only euro by the amount of Q3 Q1 and leave dollar alone.

d. buy only euro by the amount of Q3 Q1 and leave dollar alone.

2.00 1.800 S1() S. ) D1 (E) a, Q2 Q3 Quantities of euro