What does it mean when the dollar appreciates? What does it mean when the dollar depreciates?
What will be an ideal response?
If the dollar appreciates with respect to another currency, a dollar buys more units of the other currency than before. The opposite is true for a depreciation—a dollar buys less of the other currency than before.
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A commitment is a form of strategy
Indicate whether the statement is true or false
Usury laws that set maximum interest rates
a. are designed to protect the consumer. b. interfere with the market allocation process. c. have an effect only if the market rate is higher than the legal maximum. d. All of the above are correct.
Under a fractional-reserve banking system, the money supply cannot change without any action from the Federal Reserve
a. True b. False Indicate whether the statement is true or false
If the Fed announces that it will reduce the growth rate of the money supply to 3% next year but people do not believe it, the Fed is said to
A. be an inflation nutter. B. lack credibility. C. engage in commitment. D. engage in destabilizing policy.