What actions might the Fed take in the foreign exchange market? Could these actions persist in the

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What actions might the Fed take in the foreign exchange market? Could these actions persist in the long run? Would the Fed’s actions prevent interest rate parity from being achieved? Why or why not?


Suppose that the euro keeps appreciating against the U.S. dollar. The Fed decides to stop the euro from appreciating (stop the U.S. dollar from depreciating) and intervenes in the foreign exchange market.

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Foundations of Macroeconomics

ISBN: 978-0134492001

8th edition

Authors: Robin Bade, Michael Parkin

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