If Canada were to adopt a fixed exchange rate between the Canadian and US dollars:
A) Canadian monetary policy would be independent and powerful.
B) Canadian monetary policy would mirror US monetary policy.
C) Canadian fiscal policy as a demand management tool would be weakened.
D) Canadian inflation rates would be higher than US inflation rates.

Question

Quizplus · Accepted Answer

If Canada adopts a fixed exchange rate with the US dollar, its monetary policy would need to align with US monetary policy to maintain the fixed rate, limiting its independence.

If Canada Were to Adopt a Fixed Exchange Rate Between