If the Fed Wants to Maintain a Dollar Exchange Rate

question 81

Multiple Choice

If the Fed wants to maintain a dollar exchange rate of 1.20 euros per dollar but the exchange rate rises, then in the short run the Fed can

• A)do nothing.
• B)sell dollars and sell euros.
• C)sell dollars and buy euros.
• D)buy dollars and sell euros.
• E)buy dollars and buy euros.

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Definitions:

Lipid-Soluble

Refers to molecules capable of dissolving in fats, oils, and non-polar solvents, which allows them to easily pass through cell membranes.

Autocrine

A mode of hormone action where a cell secretes a hormone or chemical messenger that binds to autocrine receptors on the same cell, leading to changes in the cell.

Conjugated

Compounds that are linked or coupled, especially in the context of organic chemistry or biochemistry, such as conjugated proteins.

Neurotransmitter

Chemical substances that transmit signals across a synapse from one neuron to another target neuron, muscle, or gland.