With a floating exchange rate,when the Federal Reserve increases the U.S.money supply,the U.S.dollar will:

Question

Quizplus · Accepted Answer

If the Federal Reserve increases the U.S. money supply, more dollars will enter the market, leading to an increase in the supply of dollars. According to the law of supply and demand, if the supply of dollars increases, the value of the dollar relative to other currencies will decrease, and the dollar will depreciate. Therefore, choice B (depreciate) is the best answer in this case.

With a Floating Exchange Rate,when the Federal Reserve Increases the U.S.money