Multiple Choice
In a small open economy with perfect capital mobility, if the Bank of Canada chooses to fix the value of the Canadian dollar, what will a contractionary monetary policy do?
A) It will have no effect.
B) It will shift the AD curve to the left.
C) It will shift the AD curve to the right.
D) It will shift both the AD curve and the short-run AS curve to the left.
Correct Answer:
Verified
Correct Answer:
Verified
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