Which of the following is correct? In the 1990's
a. the Fed maintained low inflation because it had to follow a policy rule.
b. the Fed maintained low inflation even without being required to follow a policy rule.
c. the Fed was not required to follow a policy rule and let inflation move higher.
d. the Fed was required to follow a policy rule, but it provided the Fed enough discretion that inflation moved higher.
b
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"In the foreign exchange market, if the demand for the U.S. dollar increases, the U.S. dollar appreciates in value." Briefly explain whether the previous statement is correct or incorrect
What will be an ideal response?
Suppose that the Federal Reserve conducts an open market sale. Everything else held constant, this will cause the demand for U.S. assets to ________ and the U.S. dollar will ________
A) increase; appreciate B) increase; depreciate C) decrease; appreciate D) decrease; depreciate