Question Suppose that Canada decides to peg its dollar ($C or the loonie) to the US dollar at an exc

Question

 

Suppose that Canada decides to peg its dollar ($C or the loonie) to the US dollar at an exchange rate of $C1 =$US1. What will happen to Canadian interest rates as a result of the leftward shift in the US IS curve? a. They will rise. b. They will fall. c. They will not change. d. The IS curve will show an increase.

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