Given an Initial Equilibrium in the Money Market and Foreign

question 161

Multiple Choice

Given an initial equilibrium in the money market and foreign exchange market, suppose the Federal Reserve decreases the money supply of the United States.Other things equal, under a floating exchange rate system, demand for the dollar will likely

• A) increase, inducing an appreciation in value relative to other currencies.
• B) decrease, inducing a depreciation in value relative to other currencies.
• C) decrease, inducing an appreciation in value relative to other currencies.
• D) increase, inducing a depreciation in value relative to other currencies.

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Definitions:

Superior Colliculi

Structures located in the midbrain that are involved in processing visual information and controlling eye movements.

Dura Mater

The tough outermost membrane that surrounds the brain and spinal cord, offering protection.