When asked about the value of the dollar, the Chair of the Federal Reserve Board answers, "The foreign exchange policy of the United States is the responsibility of the Secretary of the Treasury; I have no comment." Discuss this answer.
Answer to relevant QuestionsExplain why a consensus has developed that countries should either allow their exchange rates to float freely or adopt a hard peg as an exchange-rate regime? Do you think the U.S. dollar is more likely to strengthen or weaken over the next few months? Explain your reasoning.You observe that two countries with a fixed exchange rate have current inflation rates that differ from each other. You check the recent historical data and find that inflation differentials have been present for several ...Explain why giving an independent central bank control over the quantity of money in the economy should reduce the occurrences of periods of extremely high inflation, especially in developing economies. Which of the following factors would increase the portfolio demand for money? Explain your choices.(a) A new website allows you to liquidate your stock holdings quickly and cheaply.(b) You expect future interest rates to ...
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