Suppose the target exchange rate set by the Fed is 150 yen per ...

[tuffie]

Suppose the target exchange rate set by the Fed is 150 yen per dollar. If the demand for dollars permanently decreases, then the Fed
 
  A) can permanently meet the target by selling dollars.
  B) can permanently meet the target by buying dollars.
  C) must violate both interest rate parity and purchasing power parity to permanently meet the target.
  D) cannot permanently maintain the target rate.

Question 2

The biases in the CPI are
 
  A) not important since they are so small.
  B) important only to economists, not the real world.
  C) important since they effect nearly 1/3 of federal government spending.
  D) not important although they are large.

[Carliemb17]

Answer to Question 1

D

Answer to Question 2

C

[tuffie]

YES! Correct, THANKS for helping me on my review

[shewald78]

Thanks for the timely response, appreciate it