Under Managed Floating Exchange Rates, Other Things Equal, the Federal

Multiple Choice

Under managed floating exchange rates, other things equal, the Federal Reserve could offset an appreciation of the dollar against the yen by

A) increasing the money supply, which promotes falling interest rates and net investment outflows.
B) increasing the money supply, which promotes rising interest rates and net investment inflows.
C) decreasing the money supply, which promotes falling interest rates and net investment outflows.
D) decreasing the money supply, which promotes rising interest rates and net investment inflows.