Suppose that Canada decides to peg its dollar ($C, or the loonie) to the U.S. dollar at an exchange rate of $C1 = $US1. Will there be pressure for the Canadian dollar to change in value against the U.S. dollar as a result of the leftward shift of the U.S. IS curve?
A) Yes, the value will appreciate.
B) Yes, the value will depreciate.
C) No, the value will not change in value.
D) Yes, but that pressure will be offset.

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The Answer of Suppose that Canada decides to peg its dollar ($C, or the loonie) to the U.S. dollar at an exchange rate of $C1 = $US1. Will there be pressure for the Canadian dollar to change in value against the U.S. dollar as a result of the leftward shift of the U.S. IS curve?
A) Yes, the value will appreciate.
B) Yes, the value will depreciate.
C) No, the value will not change in value.
D) Yes, but that pressure will be offset.

Suppose That Canada Decides to Peg Its Dollar ($C, or the Loonie)