Multiple Choice
Suppose that Canada decides to peg its dollar ($C, or the loonie) to the U.S. dollar at an exchange rate of $C1 = $US1. What might the U.S. Federal Reserve do to offset the macroeconomic effect of the leftward shift in the U.S. IS curve?
A) It would increase the money supply.
B) It would decrease the money supply.
C) It would not change its monetary policy.
D) It would not change its fiscal policy.
Correct Answer:
Verified
Correct Answer:
Verified
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