Suppose that the United States decides to fix the dollar-euro exchange rate. If the U.S. central bank observes that the quantity supplied of euros exceeds the quantity demanded of euros at the fixed exchange rate, to maintain the exchange rate, the U.S. central bank will

A) need to reduce the domestic supply of dollars.
B) need to appreciate the dollar.
C) realize an increase in its reserves of euros.
D) realize a decrease in its reserves of euros.

Dollar-Euro Exchange Rate

The value of one U.S. dollar expressed in terms of the European Union's euro, influencing international trade and investment.

Central Bank

A nation's principal monetary authority, responsible for issuing currency, managing the money supply, setting interest rates, and overseeing the banking sector.

Quantity Supplied

The quantity of a product or service suppliers are prepared and capable of offering for sale at a specific price during a certain time frame.