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Explain the mechanics of how Central Banks can influence the exchange rate.

Does the U.S. Central Bank (the Federal Reserve) influence the exchange rate?

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Patrina Schowalter
Patrina SchowalterLv2
29 Sep 2019
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Related questions

Decide whether the U.S dollar would appreciate or depreciate compared to the Mexican peso in each scenario. Assume flexible exchange rates.

1. American tourists head to Mexican beaches for the spring.

2. Mexico's money supply drops sharply.

3. Taxes on corporations in the U.S are cut. They are now lower for business investment than Mexico.

4. Drug violence discourages Americans from traveling to Mexico.

 

23. The basic type of intervention by central banks under the managed floating exchange rate system is to:

A. The central bank or government simply changes the peg for exchange rates.

B. Buy and sell currencies to influence supply and demand.

C. Renegotiate the rate at which foreign currencies can be converted into gold.

D. Make pronouncements but then do nothing and let the market set the exchange rate.

In addition to the federal reserve​ bank, what other economic actors influence the money​ supply?
a. u.s. mint and u.s. treasury.
b. u.s. senate and u.s. house of representatives.
c. u.s. President and vice president.
d. ​households, firms, and banks.

The federal funds market is the market in which

1. The government can finance its deficit budget.

2. Banks can borrow from the Fed by paying the discount rates.

3. district Federal Reserve banks can borrow from the central Federal Reserve bank.

4. banks lend and borrow from each other for short periods of time.

5. open market operations occur. 

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