Refer to Figure 12.6. Under a fixed exchange rate system, the central bank cannot increase the output gap with expansionary policy and still maintain the fixed exchange rate if the economy is at

Consider the straight-line demand curve illustrated in the above figure. At what price is total revenue maximized?

A) at a price of $8 B) at a price of $6 C) at a price of $4 D) More information is needed to determine the price at which total revenue is maximized.

The exchange rate is determined by the interaction of the supply and demand for currencies in which exchange rate system is:

A) fixed. B) flexible. C) all of the above. D) none of the above.