Need help with history: the fed adopts an easier monetary policy.

Anonymous
timer Asked: Dec 1st, 2015
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Question Description

the fed adopts an easier monetary policy. how is this likely to affect the value of the dollar and U.S. interest rates?

Tutor Answer

sainathyadlapalli
School: Cornell University

Thank you for the opportunity to help you with your question!

Interest rates can affect the value of the dollar versus that of other countries� currencies. All other things held constant, when real (inflation-adjusted) interest rates are higher in the United States than in other countries, foreigners want to invest their funds here in order to earn a high return. The resulting increase in the demand for the dollar pushes up the value of the dollar.

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