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Suppose that we observe the following change in the international market for USD: USD D Q Suppose that the Central Bank of Canada wants
Suppose that we observe the following change in the international market for USD: USD D Q Suppose that the Central Bank of Canada wants to maintain a fixed exchanged rate at the price given in A & C. How would it go about doing so? It would buy USD on the world market, causing the USD to appreciate. It would sell USD on the world market., causing the USD to depreciate. It would buy USD on the world market, causing the USD to depreciate. It would sell USD on the world market, causing the USD to appreciate.
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