What role can the Fed play in the foreign exchange market?
What will be an ideal response?
The Federal Reserve can intervene in the foreign exchange market by (temporarily) selling or buying dollars. If the Fed sells dollars, it drives the exchange rate lower and if the Fed buys dollars, it drives the exchange rate higher. The Fed cannot buy dollars forever because it will run out of the foreign exchange it using to buy the dollars. And, the Fed likely will not want to sell dollars forever because it would accumulate ever increasing amounts of foreign exchange.
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Which of the following was not a major area addressed by the Dodd-Frank Bill (i.e., Wall Street Reform and Consumer Protection Act of 2010)
a. Reducing systemic threats to the U.S. financial system. b. Solving the "too big to fail" problem in the U.S. financial system. c. Preventing spillover effects in the financial industry. d. Ensuring that investment banks and others reduced the amount of "skin in the game" they in the mortgage industry.
Microeconomics is the study of how households and firms make decisions and how they interact in specific markets
a. True b. False Indicate whether the statement is true or false
the value of paper used to make books should be added to GDP.
a. true b. false
Coke and Pepsi probably have a:
A. more elastic cross-price elasticity of demand than do Coke and bananas. B. less elastic cross-price elasticity of demand than do Coke and bananas. C. cross-price elasticity of demand that is smaller than do Coke and bananas. D. negative cross-price elasticity of demand.