If the Target Exchange Rate Is 100 Yen Per Dollar

question 476

Multiple Choice

If the target exchange rate is 100 yen per dollar and the current exchange rate is 90 yen per dollar, the Fed will

• A) sell dollars and the demand for dollars will decrease.
• B) buy dollars and the demand for dollars will increase.
• C) buy dollars and the demand for dollars will decrease.
• D) sell dollars and the demand for dollars will increase.

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Definitions:

Pilot Operated

A system or valve controlled indirectly through the use of a smaller, pilot valve rather than directly by mechanical means.

Flow Control

The regulation and management of the rate or volume of flow in a system, such as fluids in pipelines or data over networks, to meet certain conditions or requirements.

Directional Control

The mechanism or system used to steer or change the direction of a vehicle or a machine part.

Pilot

Any of a number of devices that receives a signal and then effects an action; can also be known as a relay.