To appreciate the U.S. dollar against the Mexican peso, in the ...

[elizabeth18]

To appreciate the U.S. dollar against the Mexican peso, in the foreign exchange market the Fed could ________ dollars and ________ pesos.
 
  A) buy; buy
  B) sell; sell
  C) sell; buy
  D) buy; sell
  E) None of the above answers is correct because the Fed cannot affect the U.S. exchange rate.

Question 2

The Fed buys 50,000 of government securities. The desired reserve ratio is 10 percent and the currency drain ratio is zero. What will be the change in the quantity of money?
 
  A) 0 B) 5,000 C) 50,000 D) 5,000,000 E) 500,000

[Dominic]

Answer to Question 1

D

Answer to Question 2

E