QUESTION 14 If the Fed ____ the interest rates when inflationary expectations remain unchanged, the most likely result is that the value of dollar will ____ and the economy may ____. a. decreases; appreciate; weaken b. decreases; appreciate; strengthen c. increases; depreciate; strengthen d. increases; appreciate; weaken 2 points

QUESTION 15 Assume that the dollar has been consistently depreciating over a long period. The Fed decides to counteract this movement by intervening in the foreign exchange market using sterilized intervention. The Fed would: a. sell dollars for foreign currency and simultaneously sell Treasury securities for dollars. b. sell dollars for foreign currency and simultaneously buy Treasury securities with dollars. c. buy dollars with foreign currency and simultaneously sell Treasury securities for dollars. d. buy dollars with foreign currency and simultaneously buy Treasury securities with dollars.