What peg should the united states set

Reference no: EM133666044

Problem: Advanced Analysis- Refer to the following table, in which Qd is the quantity of loonies demanded, P is the dollar price of loonies, Qs is the quantity of loonies supplied in year 1, and Qs' is the quantity of loonies supplied in year 2. All quantities are in billions. Assume the exchange rate is fixed against the dollar at 135 dollars = 1 loonie. Qd P Qs Qs' 320 150 960 640 480 145 800 480 640 140 640 320 800 135 480 160 Instructions: Enter your answer as a whole number. a. In year 1, what would be the minimum initial size of the U.S. reserve of loonies such that it could maintain the peg throughout the year? What about the minimum initial size that would be necessary at the start of year 2? What peg should the United States set if it wants the fixed exchange rate to increase the domestic money supply by $46.4 trillion?

Reference no: EM133666044

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