When the Fed lowers the federal funds rate, the U.S. dollar __________on the foreign exchange market and __________.

Question

Quizplus · Accepted Answer

When the Fed lowers the federal funds rate, it typically leads to a depreciation of the U.S. dollar because lower interest rates make U.S. assets less attractive to foreign investors. This depreciation makes U.S. exports cheaper and imports more expensive, which can increase aggregate demand.

When the Fed Lowers the Federal Funds Rate, the U