The U.S. dollar depreciates. Explain which of the following events could have caused the depreciation and why.

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The U.S. dollar depreciates. Explain which of the following events could have caused the depreciation and why. 

  • The Fed intervened in the foreign exchange market. Did the Fed buy or sell U.S. dollars?
  • People began to expect that the U.S. dollar would depreciate.
  • The U.S. interest rate differential increased.
  • Foreign investment in the United States increased.
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Foundations of Macroeconomics

ISBN: 978-0134492001

8th edition

Authors: Robin Bade, Michael Parkin

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