Advanced Analysis: Refer to the following table, in which is the quantity of loonies demanded, Pis the dollar price of loonies, Q the quantity of loonies supplied in year 1, and Qg'is the quantity of loonies supplied in year 2. All quantities are in billions. Assume the exchange rate is fixed against the dollar at 115 dollars 1 loonie. Qd 20 30 40 50 Р 130 125 120 115 Qs billion loonies 60 50 40 30 Os 40 30 20 10 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?

Advanced Analysis: Refer to the following table, in which is the quantity of loonies demanded, Pis the dollar price of loonies, Q the quantity of loonies supplied in year 1, and Qg'is the quantity of loonies supplied in year 2. All quantities are in billions. Assume the exchange rate is fixed against the dollar at 115 dollars 1 loonie. Qd 20 30 40 50 Р 130 125 120 115 Qs billion loonies 60 50 40 30 Os 40 30 20 10 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?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

Advanced Analysis: Refer to the following table, in which Qd is the quantity of loonies demanded, Pis the dollar price of loonies, Qgis
the quantity of loonies supplied in year 1, and Qg'is the quantity of loonies supplied in year 2. All quantities are in billions. Assume the
exchange rate is fixed against the dollar at 115 dollars = 1 loonie.
Qd
38珀$50
20
40
P
130
125
120
115
Qs
60
50
40
30
Qs'
40
30
20
10
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?
C billion loonies

4
b. What about the minimum initial size that would be necessary at the start of year 2?
billion loonies
Next, consider only the data for year 1.
c. What peg should the United States set if it wants the fixed exchange rate to increase the domestic money supply by $2.5 trillion?
dollars per loonie

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