Assume That the Fed Performs a Foreign Exchange Intervention in Which

question 113

Multiple Choice

Assume that the Fed performs a foreign exchange intervention in which it does nothing except buy German government bonds. One result of this will be that:

• A) the dollar depreciates.
• B) the euro depreciates.
• C) both the dollar and the euro depreciate.
• D) the dollar appreciates and the euro depreciates.

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