Suppose the currency price of the U.S. dollar in terms of the Japanese yen starts to fall. To prevent that from occurring, the U.S. central bank should
A) use U.S. dollars to buy Japanese goods.
B) use yen reserves to buy U.S. dollars in the foreign exchange market.
C) sell U.S. dollars in the foreign exchange market in exchange for yen.
D) buy both U.S. dollars and yen in the foreign exchange market.
Answer: B
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The supply of foreign exchange to the United States is generated by the desire for foreigners to acquire dollars for all except one of the following reasons. Which is the exception?
a. The United States is considered a safe haven in times of political unrest. b. The dollar has long been accepted as an international medium of exchange. c. Foreigners want to buy U.S. assets. d. U.S. goods have become less attractive to foreigners. e. Foreigners wish to make cash gifts to family in the United States.
Which of the following played a role in depressing aggregate demand in 2001?
a. the end of a stock-market bubble b. corporate accounting scandals c. the terrorist attacks on September 11 of that year d. All of the above are correct.