Floating exchange rates
A. float according to the laws of supply and demand.
B. are fixed by speculators in foreign exchange markets.
C. are rarely used in foreign exchange transactions.
D. All of the choices are true characteristics.
A. float according to the laws of supply and demand.
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In June 2008, $1 bought 104 yen and in October, $1 bought 93 yen. This change means
A) U.S. exports became more expensive for Japanese buyers. B) there will be a movement down along the demand curve for dollars. C) there was an increase in the value in the dollar, relative to the yen. D) the dollar appreciated relative to the yen.
Suppose that the federal funds rate and the discount rate are equal initially at 3%. If the discount rate is then lowered to 2.5%, to whom will a bank be more likely to go for a loan: the Federal Reserve or another bank? Explain your answer in detail, and be sure to mention the impact that this situation would have on the money supply
Constraints
What will be an ideal response?
What is a surplus? What is a shortage?
What will be an ideal response?