Suppose That Canada Decides to Peg Its Dollar ($C, or the Loonie)

question 17

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. Will there be pressure for the Canadian dollar to change in value against the U.S. dollar as a result of the leftward shift of the U.S. IS curve?

• A) Yes, the value will appreciate.
• B) Yes, the value will depreciate.
• C) No, the value will not change in value.
• D) Yes, but that pressure will be offset.

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Definitions:

1920s

The decade marked by significant cultural, economic, and social changes worldwide, known in the United States as the "Roaring Twenties" characterized by prosperity, jazz music, and the flapper culture.

Americans

Americans refers to the citizens or nationals of the United States, encompassing a diverse population with a wide range of cultural, ethnic, and racial backgrounds.

Economic Policies

Strategies and decisions made by governments regarding the financial management of the country, including taxation, government spending, and the regulation of money supply.

Great Depression

A severe global economic downturn that began in 1929 and lasted until the late 1930s, marked by massive unemployment and financial crisis.