-Refer to the Above Diagram Where D and S Are

question 99

Multiple Choice

-Refer to the above diagram where D and S are Canada's demand for and supply of Swiss francs.At the equilibrium exchange rate,E,Canada's balance of payments is in equilibrium.Given a change in demand from D to D' Canada could maintain the dollar price of francs by:

• A) shifting the S curve to the right through the use of domestic expansionary policies.
• B) instituting exchange controls to ration Ed francs to Canadian importers who want Ec francs.
• C) using international monetary reserves to cover the Ec shortage of francs.
• D) using international monetary reserves to cover the cd shortage of francs.

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Definitions:

Full Employment Level

A situation in which all available labor resources are being used in the most economically efficient way, essentially meaning that unemployment is at the lowest possible level without causing inflation.

Keynesians

Economists or the economic theory advocating for government intervention in the economy, especially fiscal policy, to manage demand and address unemployment.

Say's Law

A principle that asserts supply creates its own demand, suggesting that producing goods and services generates the means and willingness to purchase other goods and services.

Economy Produces

Refers to the total output of goods and services generated by an economy within a specific period.