Based on the figure above, which of the following factors could lead the supply curve to shift rightward from S0 to S2?
A) a fall in foreign interest rates
B) a fall in the U.S. interest rate
C) a rise in the U.S. exchange rate
D) a fall in the U.S. exchange rate
E) a rise in expected future U.S. exchange rate
Question 2
Suppose in the money market the equilibrium nominal interest rate is 5 percent. If the Fed increases the quantity of money, what is the effect on the nominal interest rate?
What will be an ideal response?
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