The central bank of Saudi Arabia (Saudi Arabian Monetary Authority or SAMA) has pegged (fixed) the country's currency, Saudi riyal (SAR), to the US dollar (USD) at the rate of 3.75 SAR/$. To implement this policy, the SAMA prints money (SAR) and buys USD from anyone who wants to exchange USD for SAR at that rate. By doing so, SAMA increases the Saudi money supply. Similarly, it sells USD to anyone who wants to exchange SAR for USD at that rate. Such transactions reduce the Saudi money supply. In recent months businesses in Saudi Arabia have been buying large amounts of USD with their riyals to move their financial assets to the US. Assuming no other changes that impact the money market, this process

a.

may have made the LM curve in Saudi Arabia flatter or steeper.

b.

could not have had any impact on the LM curve in Saudi Arabia.

c.

must have made the LM curve in Saudi Arabia steeper.

d.

must have made the LM curve in Saudi Arabia flatter.