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.

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Definitions:

Per-Unit Subsidy

A financial incentive given by the government, reducing the cost of each unit of a good or service to either the producer or consumer.

Profit Maximization

A business objective to achieve the highest possible profit from operations, often by adjusting production, prices, and other variables.

Competitive Industry

An industry structure where many firms compete for market share, with no single company dominating the market.

Demand Curve

A graphical representation showing the relationship between the price of a good and the quantity of that good that consumers are willing to buy.