The following graph shows the market for euros in terms of the Thai baht. The market is initially in equilibrium at $1$ baht per euro and $15$ billion euros traded per day. Suppose the baht falls in value, causing investors to sell their baht$-$denominated assets and to sell baht for euros in order to buy euro$-$denominated assets. As a result, the demand for euros shifts to the right, from $D_0$ to $D_1.$

If Thailand wants to maintain a fixed exchange rate of $1$ baht per euro, it should euros in the foreign exchange market. To be successful, this policy would have to

euros by

billion euros at any given exchange rate.

In this type of situation, a speculative attack may occur if investors believe which of the following statements?

The demand for Thai goods is going to dramatically increase.

Thai assets are soon going to increase in value.

Thailand is running out of euro reserves.

True or False: In the event of a successful speculative attack, foreign investors tend to benefit because Thai businesses are better able to pay their foreign debts.

True

False