Question: How does contractionary monetary policy by the Fed affect exchange rates? Answer: Contractionary monetary policy by the Fed increases interest rates; higher interest rates increase

How does contractionary monetary policy by the Fed affect exchange rates? Answer: Contractionary monetary policy by the Fed increases interest rates; higher interest rates increase the demand for dollars and at the same time decrease the supply of dollars in the foreign exchange markets, and both, the increase in demand and the decrease in supply, will make the dollar ____________

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