At the end of 2013, the Fed was buying about $100 billion of securities per month, a much higher amount than normal. These purchases would ________ the value of the dollar on foreign exchange markets thereby ________ U.S. exports.

Question

Quizplus · Accepted Answer

The Fed's purchases of securities increase the money supply, which tends to lower the value of the dollar on foreign exchange markets. A weaker dollar makes U.S. exports cheaper and more competitive abroad, thereby increasing U.S. exports.

At the End of 2013, the Fed Was Buying About