Use the following diagram to answer the following questions.
-Refer to Yen. Assume that exchange rates have been fixed at 90 yen per dollar, what should the United States do if it is determined that the current exchange rate is already 90 yen per dollar?
A) The Federal Reserve should sell dollars as a preventative action.
B) The Federal Reserve should buy dollars as a preventative action.
C) No intervention is necessary to maintain the exchange rate.
D) The Federal Reserve should buy yen as a preventative measure.
Correct Answer:
Verified
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