Suppose that the European Central Bank enacts expansionary policy. Everything else held constant,this will cause the demand for U.S. assets to ________ and the U.S. dollar to ________.

Question

Quizplus · Accepted Answer

Expansionary policy by the European Central Bank will lead to a decrease in the demand for euro and an increase in the demand for other currencies, including the U.S. dollar. This will cause the U.S. dollar to appreciate in value.

Suppose That the European Central Bank Enacts Expansionary Policy