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-Refer to Exhibit FF-5

Question 57

Multiple Choice

-Refer to Exhibit FF-5. If the U.S. government wants to maintain the foreign exchange rate at 100 yen = $1, and the demand for dollars shifts from D to D<sup>'</sup>, the government should A) increase domestic interest rates B) decrease domestic interest rates C) supply dollars to the foreign exchange market D) raise tariffs on U.S. goods E) depreciate the dollar
-Refer to Exhibit FF-5. If the U.S. government wants to maintain the foreign exchange rate at 100 yen = $1, and the demand for dollars shifts from D to D', the government should


A) increase domestic interest rates
B) decrease domestic interest rates
C) supply dollars to the foreign exchange market
D) raise tariffs on U.S. goods
E) depreciate the dollar

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