When the Fed Eases U

question 21

Multiple Choice

When the Fed eases U.S. monetary policy, domestic interest rates ________, making U.S. assets relatively less 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:

Trend Analysis

The practice of collecting information and attempting to spot a pattern, often used in financial analysis to predict future movements.

Lower Profitability

A situation where a company or business generates less profit or income compared to previous periods or compared to expectations.

Default Risk

The possibility that a borrower will fail to pay back a loan according to the agreed terms.

Debt Financing

The process of raising capital through the sale of bonds or obtaining a loan, where the borrowed amount is expected to be repaid with interest.