If the Fed Desires to Weaken the Dollar Without Affecting

question 67

Multiple Choice

If the Fed desires to weaken the dollar without affecting the dollar money supply, it should:

• A) exchange dollars for foreign currencies, and sell some of its existing Treasury security holdings for dollars.
• B) exchange foreign currencies for dollars, and sell some of its existing Treasury security holdings for dollars.
• C) exchange dollars for foreign currencies, and buy existing Treasury securities with dollars.
• D) exchange foreign currencies for dollars, and buy existing Treasury securities with dollars.

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Definitions:

Limited Liability Partnership

A partnership structure where partners' personal liability for business debts is limited to the amount they invest in the business.

Liability

The state of being legally responsible for something, typically by law or financial obligation.

Limited Partner

An investor in a partnership who is not directly involved in the day-to-day operations and whose liability is limited to the amount invested in the partnership.

Vicarious Liability

The legal responsibility of one party for the actions of another, typically in employer-employee relationships.