If the Federal Reserve pursues expansionary monetary policy, the dollar is likely to fall against foreign currencies, all other things being equal.

Question

Quizplus · Accepted Answer

When the Federal Reserve pursues expansionary monetary policy, it increases the money supply in the economy. This leads to lower interest rates, which in turn can lead to a decrease in the value of the dollar relative to other currencies as investors turn to higher-yielding currencies.

If the Federal Reserve Pursues Expansionary Monetary Policy, the Dollar