Multiple Choice
If the Bank of Canada announces that it will fix the exchange rate at 100 yen per Canadian dollar, but with the current money supply the equilibrium exchange rate is 150 yen per dollar, then:
A) arbitrageurs will sell yen in the marketplace.
B) arbitrageurs will buy yen from the Bank of Canada.
C) the money supply will fall until the market exchange rate is 100 yen per dollar.
D) the money supply will rise until the market exchange rate is 100 yen per dollar.
Correct Answer:
Verified
Correct Answer:
Verified
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