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FIGURE 34-5 Refer to Figure 34-5

Question 124

Multiple Choice

FIGURE 34-5 Refer to Figure 34-5.If the supply curve of foreign exchange shifts from S<sub>0 </sub>to S<sub>1,</sub>the Bank of Canada could maintain a fixed exchange rate at e<sub>0</sub> by A) selling Canadian currency. B) holding foreign reserves constant. C) buying foreign currency reserves. D) selling foreign currency reserves. E) lowering the overnight interest rate. FIGURE 34-5 Refer to Figure 34-5.If the supply curve of foreign exchange shifts from S0 to S1,the Bank of Canada could maintain a fixed exchange rate at e0 by


A) selling Canadian currency.
B) holding foreign reserves constant.
C) buying foreign currency reserves.
D) selling foreign currency reserves.
E) lowering the overnight interest rate.

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