Return to problem 3 and assume that the exchange rate is fixed at 110. In year 1, what is the minimum initial size of the U.S. reserve of loonies such that the United States can maintain the peg throughout the year? What is the minimum initial size that is necessary at the start of year 2? Next, consider only the data for year 1.

What peg should the United States set if it wants the fixed exchange rate to increase the domestic money supply by

$1.2 trillion?