The Fed is concerned about inflation.Its policy will ________ U.S.short-term interest rates and,in the foreign exchange market,lead to the value of the U.S.dollar ________.
A)lower;rising
B)raise;rising
C)raise;not changing
D)lower;falling
E)lower;not changing

Question

Quizplus · Accepted Answer

The Fed's concern about inflation suggests that it may adopt a tightening monetary policy, which typically involves raising short-term interest rates. This would lead to an increase in demand for the U.S. dollar, thereby causing its value to rise in the foreign exchange market. Therefore, choice (B) is the best answer.

The Fed Is Concerned About Inflation