The Fed in the U.S

question 34

Multiple Choice

The Fed in the U.S.

• A) allows a flexible exchange rate, though their actions can impact the exchange rate.
• B) has no influence on the exchange rate.
• C) sells U.S. dollars to China in an attempt to depreciate the U.S. dollar.
• D) alternates between a flexible, fixed, and crawling peg exchange rate policy depending on economic conditions.

---

Definitions:

Shift

In economics, a change in the position of a demand or supply curve which reflects a change in conditions other than price.

Adverse Supply Shock

A sudden and significant decrease in the supply of a good or service, which typically leads to an increase in prices and can temporarily boost inflation.

Short-run Phillips Curve

A graphical representation showing the inverse relationship between the level of unemployment and the rate of inflation in an economy over the short-term.

Inflation

The degree of uptick in the universal valuation of goods and services, weakening purchase potency.