Central banks often intervene in currency markets. This activity is called

To appreciate the U.S. dollar against the Mexican peso, in the foreign exchange market the Fed could ________ dollars and ________ pesos

A) buy; buy B) sell; sell C) sell; buy D) buy; sell E) None of the above answers is correct because the Fed cannot affect the U.S. exchange rate.

Which of the following is the best example of substitutes?

a. coffee and cream b. videotapes and VCRs c. money and biscuits d. tortillas and salsa e. hiking boots and athletic shoes