An increase in the interest rate tends to increase the demand for loanable funds

Assume that the economy is in equilibrium when the real interest rate rises. Explain, step-by-step, how the components of expenditure adjust to bring the economy to its new equilibrium

What will be an ideal response?

To prevent the dollar from depreciating, the U.S. central bank can try to fix the currency value of the dollar when they

A) buy U.S. dollars in the foreign exchange market. B) sell U.S. dollars in the foreign exchange market. C) abandon the U.S. dollar and use another country's currency as its legal currency. D) buy foreign currencies in the foreign exchange market.