When the Fed Tightens U

question 151

Multiple Choice

When the Fed tightens U.S. monetary policy, domestic interest rates ________, making U.S. assets relatively more attractive to foreign investors, and ________ the equilibrium exchange rate.

• A)rise; increasing
• B)fall; increasing
• C)fall; decreasing
• D)rise; decreasing

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Definitions:

Business Owner

An individual or entity that possesses and oversees the operations of a company or enterprise, ensuring its functionality and aiming for its success.

Profitability

The degree to which a business or activity yields profit or financial gain, measured by the ratio of profit to revenues or investment.

Demand Curve

A graphical representation of the relationship between the price of a good or service and the quantity demanded for a given period, typically downward sloping.