The British monetary authorities are committed to maintaining the exchange rate of the UK £ against the US dollar between ${P_1}$ and ${P_2}$ on the diagram.
What might they do if demand changes from ${D_1}$ to ${D_2}$?
1 )
impose controls on UK investment overseas
2 )
increase interest rates
3 )
sell $ out of foreign exchange reserves
sell £ on the foreign exchange markets
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