In October 2008, central banks around the world coordinated a decrease in interest rates. Ben Bernanke, Chairman of the Federal Reserve stated that "policy makers will remain in close contact, monitor developments closely and stand ready to take additional steps should conditions warrant."
If all the banks enacted the policy simultaneously, the U.S. interest rate differential would and so the U.S. exchange rate would .
A) not change; rise
B) increase; fall
C) decrease; rise
D) not change; not change

Question

Quizplus · Accepted Answer

If all the banks enacted the policy simultaneously, the U.S. interest rate differential would not change, and so the U.S. exchange rate would not change.

In October 2008, Central Banks Around the World Coordinated a Decrease