-In the Above Figure, Suppose the Demand for Dollars Permanently

question 346

Multiple Choice

-In the above figure, suppose the demand for dollars permanently decreases to D₂. To maintain the target, the Fed

• A) cannot permanently maintain the exchange rate target of 150 yen per dollar.
• B) must decrease the nationʹs net exports.
• C) can buy dollars.
• D) can sell dollars.

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Definitions:

Straight-Line Method

A depreciation method that allocates an equal portion of the initial cost of an asset to each accounting period over its useful life.

Amortization

The process of gradually writing off the initial cost of an asset over a period.

Bondholders

Investors or entities that hold debt securities, especially bonds, issued by corporations or governments, entitling them to interest payments and the return of principal.

Issuing Corporation

The company or entity that offers securities, like stocks or bonds, for sale to investors in order to raise capital.