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    Exam 9: The Exchange Rate and the Balance of Payments
  5. Question
    If the Fed Sets a Target Exchange Rate That Is
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If the Fed Sets a Target Exchange Rate That Is

Question 65

Question 65

Multiple Choice

If the Fed sets a target exchange rate that is higher than the current exchange rate, then


A) the Fed must sell dollars.
B) the Fed must buy dollars.
C) the Fed can do nothing in the short run.
D) will try to print more dollars for foreign distribution.

Correct Answer:

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