Suppose the Fed purchases Treasury securities.Interest rates in the United States will ________ and the U.S.dollar will ________ against foreign currencies.
A)decrease; appreciate
B)decrease; depreciate
C)increase; depreciate
D)increase; appreciate

Question

Quizplus · Accepted Answer

When the Fed purchases Treasury securities, it increases the money supply in the market, leading to a decrease in interest rates. As a result, investors might move their investments to other countries with higher interest rates, causing the U.S. dollar to depreciate against foreign currencies.

Suppose the Fed Purchases Treasury Securities