After you have studied Economics in the News on pp. 270–271 answer the following questions.

a. What happened to the foreign exchange value of the U.S. dollar in July and August 2014?

b. What could the Fed have done to stop the rise in the dollar?

c. What could the European Central Bank have done that might have stopped the fall in the euro?

d. What can you infer about the changes in U.K.

pound–euro exchange rate during July and August 2014? Can you think of a reason for the behavior of that exchange rate?

e. If the dollar continues its upward path against the euro, what do you predict will be the consequences for U.S. and European relative inflation rates?