Author Question: Suppose the target exchange rate set by the Fed is 150 yen per dollar. If the demand for dollars ... (Read 125 times)

tuffie · **on:** Jun 29, 2018

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.