These are the extreme positions. The Bank of Canada's actual path is somewhere in the middle. Some of the brunt of higher U.

These are the extreme positions. The Bank of Canada’s actual path is somewhere in the middle. Some of the brunt of higher U.S. interest rates is taken in higher domestic rates, some through a lower valued Canadian dollar, and some through a loss of international reserves.

a. What are the extreme positions to which the first sentence refers?

b. What are the long-run implications of this middle-of-the-road policy?

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