Which area in the above figure is the deadweight loss if 100 ...

[Frost2351]

Which area in the above figure is the deadweight loss if 100 snowboards are produced?
 
  A) A + B + C
  B) D + E + F
  C) C + E
  D) There is no deadweight loss when 100 snowboards are produced.

Question 2

How does the Fed intervene in the foreign exchange market and what the effects are of the Fed's actions?
 
  What will be an ideal response?

[6ana001]

Answer to Question 1

C

Answer to Question 2

The Fed intervenes in the foreign exchange market and changes the value of the exchange rate by buying or selling dollars. If the Fed wants to raise the exchange rate and appreciate the dollar, the Fed will buy dollars. By buying dollars the Fed increases the demand for dollars and raises the exchange rate. If the Fed wants to lower the exchange rate and depreciate the dollar, the Fed will sell dollars. By selling dollars the Fed increases the supply of dollars and lowers the exchange rate.