When the Fed raises the federal funds rate, in the foreign exchange market people__________ dollars and the price of the dollar __________on the foreign exchange market.

Question

Quizplus · Accepted Answer

When the Fed raises the federal funds rate, it typically leads to higher interest rates in the U.S., making dollar-denominated assets more attractive. This increases demand for dollars, causing the price of the dollar to rise in the foreign exchange market.

When the Fed Raises the Federal Funds Rate, in the Foreign