The graph below shows the exchange market for U.S. dollars with respect to the Chinese yuan, with three different exchange rates not Which of the following could describe the current situation in this market, based on the observation in class that the Chinese money supply has been growing due to their failure to sterilize? yuan/S Ss R3 -- R2 R1 Ds Os O The exchange rate is R1 and the Chinese are adding to their international reserves O The exchange rate is R2 and the Chinese are neither gaining nor losing international reserves. O The exchange rate is R3 and the Chinese are adding to their international reserves O The exchange rate is R3 and the Chinese are losing international reserves.

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