With everything else the same, which of the following would increase the demand for U.S. dollars in the foreign exchange market?
I. a rise in the U.S. interest rate
II. a fall in interest rates in foreign countries
III. a rise in the expected future exchange rate
A) I only
B) I and II only
C) I and III only
D) I, II, and III
D
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According to New Keynesians, which of the following is one of the two key factors that determines the inflation rate?
A) stock prices B) oil prices C) fiscal policy D) anticipated future inflation
Describe the channels by which monetary policy ripples through the economy and explain how each channel operates
What will be an ideal response?
If the Fed raises its target for the federal fund rate, this indicates that
A) the Fed is pursuing an expansionary monetary policy. B) the Fed is attempting to combat deflation. C) the Fed is pursuing a contractionary monetary policy. D) The Fed is concerned that the growth in aggregate demand is too slow to keep up with potential GDP.
________ are financial intermediaries that acquire funds by selling shares to many individuals and using the proceeds to purchase diversified portfolios of stocks and bonds
A) Mutual funds B) Investment banks C) Finance companies D) Credit unions