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2 from Homework 1 continued here. Use the information from problem 2 of Homework 7 to complete this problem. a. If the Federal Reserve wanted
2 from Homework 1 continued here. Use the information from problem 2 of Homework 7 to complete this problem. a. If the Federal Reserve wanted to fix the price of $ to that found in question 2, part a of Homework 7, would they buy or sell $? How large (quantity) a purchase or sell would they make? b. Instead of the change in part b, suppose the demand for U.S. dollars changes to R = 3 - 0.1Q. What happened to the demand for U.S. dollars? What type of change in inpayments/outpayments would cause this change (increase or decrease)? Explain. c. Find the new equilibrium exchange rate and quantity of $ traded. Did the value of the Canadian dollar appreciate or depreciate? Explain. d. If the Federal Reserve wanted to fix the price of $ to that found in part b, would they buy or sell $? How large (quantity) a purchase or sell would they make
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