Suppose we were analyzing the pound per Swiss franc foreign exchange market. If Switzerland's risk level rises relative to England and nothing else changes, then
a. Neither supply nor demand in the foreign exchange market change because relative international prices influence trade flows and not the exchange rate.
b. The supply of Swiss francs in the foreign exchange market rises, and the demand for Swiss francs in the foreign exchange market falls, causing an appreciation of the Swiss franc.
c. The supply of Swiss francs in the foreign exchange market rises, and the demand for Swiss francs in the foreign exchange market rises, causing an uncertain change in the value of the Swiss franc.
d. The supply of Swiss francs in the foreign exchange market falls, and the demand for Swiss francs in the foreign exchange market rises, causing an appreciation of the Swiss franc.
e. The supply of Swiss francs in the foreign exchange market rises, and the demand for Swiss francs in the foreign exchange market falls, causing a depreciation of the Swiss franc.
.E
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The Federal Reserve influences the level of interest rates in the short run by changing the
A) demand for money through changes in reserve requirements. B) supply of money through open market operations. C) supply of money through changes in stock market operations. D) demand for money through open market operations.
Which of the following is true with regard to the use of countercyclical fiscal policy as a stabilization tool?
What will be an ideal response?