Suppose that the euro keeps appreciating against the U.S. dollar. The Fed decides to stop the euro from appreciating (stop the U .S. dollar from depreciating) and intervenes in the foreign exchange market. Are there any other actions that the Fed could take to raise the foreign exchange value of the dollar? The value of the dollar will rise if the Fed because makes an open market sale; the U.S. A. interest rate differential will rise B. makes an open market purchase; the U.S. interest rate differential will fall C. increases the demand for money; traders will expect the dollar to appreciate D. decreases the demand for money; traders will expect the dollar to depreciate
Suppose that the euro keeps appreciating against the U.S. dollar. The Fed decides to stop the euro from appreciating (stop the U .S. dollar from depreciating) and intervenes in the foreign exchange market. Are there any other actions that the Fed could take to raise the foreign exchange value of the dollar? The value of the dollar will rise if the Fed because makes an open market sale; the U.S. A. interest rate differential will rise B. makes an open market purchase; the U.S. interest rate differential will fall C. increases the demand for money; traders will expect the dollar to appreciate D. decreases the demand for money; traders will expect the dollar to depreciate
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Explain all option compulsary......you will not explain all option then I will give you down upvote...
Transcribed Image Text:Suppose that the euro keeps appreciating
against the U.S. dollar. The Fed decides to
stop the euro from appreciating (stop the U
.S. dollar from depreciating) and
intervenes in the foreign exchange market.
Are there any other actions that the Fed
could take to raise the foreign exchange
value of the dollar? The value of the dollar
will rise if the Fed
because
makes an open market sale; the U.S.
A.
interest rate differential will rise B. makes
an open market purchase; the U.S.
interest rate differential will fall C.
increases the demand for money; traders
will expect the dollar to appreciate D.
decreases the demand for money; traders
will expect the dollar to depreciate
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