By which the bank of canada would need to reduce the supply

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Reference no: EM13198943

Suppose the Bank of Canada contracts the money supply in an effort to reduce aggregate demand by a particular amount, say $10 billion. If Canada was a closed economy, would the amount by which the Bank of Canada would need to reduce the supply of money to accomplish this goal be greater or smaller than the amount it would need to reduce the supply of money if Canada was an open economy with a flexible exchange rate?

Reference no: EM13198943

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