If the Fed pursues expansionary monetary policy,the dollar is likely to fall against foreign currencies,all other things being equal.

Question

Quizplus · Accepted Answer

Expansionary monetary policy involves an increase in the money supply and a decrease in interest rates, leading to lower exchange rates for the US dollar against other currencies. This is due to the lower demand for dollars in the foreign exchange market as investors turn to other currencies with higher interest rates.

If the Fed Pursues Expansionary Monetary Policy,the Dollar Is Likely