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. Further, assume that the exchange rate is fixed at 110. Qd P Qs Qs' 10 125 30 20 15 120 25 15 20 115 20 10 25 110 15 5 Instructions: Enter your answers as whole numbers.
Advanced Analysis: Refer to the following table, in which Qd is the quantity of loonies
| Qd | P | Qs | Qs' |
|---|---|---|---|
| 10 | 125 | 30 | 20 |
| 15 | 120 | 25 | 15 |
| 20 | 115 | 20 | 10 |
| 25 | 110 | 15 | 5 |
Instructions: Enter your answers as whole numbers.
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?
billion loonies
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 $1.2 trillion?
dollars per loonie
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