Suppose that the Federal Reserve conducts an open market sale. Everything else held constant,this will cause the demand for U.S. assets to ________ and the U.S. dollar will ________.

Question

Quizplus · Accepted Answer

An open market sale by the Federal Reserve involves selling government securities, which increases interest rates. Higher interest rates attract foreign investment, increasing the demand for U.S. assets and causing the U.S. dollar to appreciate.

Suppose That the Federal Reserve Conducts an Open Market Sale