If the Target Exchange Rate Is 100 Yen Per Dollar

question 392

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

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