6.6

6.6 Suppose the Bank of Canada wants to maintain the value of the Canadian dollar at \$0.95 U.S. Indicate what type of official foreign exchange intervention you would recommend the central bank take in each of the following cases and illustrate each one using demand and supply diagrams. a) Market forces are pushing the exchange value above 0.95 U.S. b) Market forces are pushing the exchange value below 0.95 U.S. c) What should the central bank do with interest rates in a) and b) above? d) How does a central bank offset an unwanted rise in the amount of Canadian dollars in the financial system