Suppose that the Bank of England is trying to keep the exchange rate Pounds/Dollar (Pounds to...

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Suppose that the Bank of England is trying to keep the exchange rate Pounds/Dollar (Pounds to buy one Dollar) within a band of 0.7 and 0.8. The graph below plots the demand and supply of Dollars. The band is also drawn. Suppose that the supply of dollars shifts from S to S2. What happens to the nominal exchange rate Pounds/Dollar and international reserves of England if the Bank of England intervenes by buying or selling the minimum amount to keep the exchange rate within the band? The comparision is between the equilibrium before the shift in supply and the equilibrium after the shift in supply with intervention from the Bank of England. Pounds per $ 0.8 0.7 S Millions of $ Suppose that the Bank of England is trying to keep the exchange rate Pounds/Dollar (Pounds to buy one Dollar) within a band of 0.7 and 0.8. The graph below plots the demand and supply of Dollars. The band is also drawn. Suppose that the supply of dollars shifts from S to S2. What happens to the nominal exchange rate Pounds/Dollar and international reserves of England if the Bank of England intervenes by buying or selling the minimum amount to keep the exchange rate within the band? The comparision is between the equilibrium before the shift in supply and the equilibrium after the shift in supply with intervention from the Bank of England. Pounds per $ 0.8 0.7 S Millions of $