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The Figure Above Shows the Market for Foreign Exchange in 2001

Question 47

Multiple Choice

The figure above shows the market for foreign exchange in 2001 and 2009. - What would the Fed have done if it had tried to keep the exchange rate at its 2001 level? A) buy dollars and buy euros B) sell dollars and sell euros C) buy dollars and sell euros D) sell dollars and buy euros E) None of the above are correct because the Fed cannot affect the exchange rate.
The figure above shows the market for foreign exchange in 2001 and 2009.
-

What would the Fed have done if it had tried to keep the exchange rate at its 2001 level?


A) buy dollars and buy euros
B) sell dollars and sell euros
C) buy dollars and sell euros
D) sell dollars and buy euros
E) None of the above are correct because the Fed cannot affect the exchange rate.

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