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The Fed's Indirect Method of Intervention Is to Trade Dollars

question 52

True/False

The Fed's indirect method of intervention is to trade dollars for or against other currencies.


Definitions:

Depreciates

The process by which an asset loses value over time, often due to wear and tear or market conditions.

Foreign Exchange Market

A global marketplace for exchanging national currencies against one another.

Trade Deficit

A situation where a country's imports exceed its exports, resulting in a negative balance of trade.

Managed-Floating System

A foreign exchange policy whereby a country's central bank intervenes to control its currency value within certain limits, while still allowing the currency value to fluctuate in response to market forces.

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