Help with these questions.

1:

4. The eurozone Because countries in the eurozone frequently do business with each other, economic conditions, both favorable and unfavorable, are more likey to spread to other eurozone member countries.7. Indirect intervention Suppose the Fed wants to strengthen the dollar by using indirect intervention. To accomplish this goal, the Fed could increase V interest rates in the U.S. This would decrease V the supply of other currencies (in exchange for dollars), thereby lowering v the value of the dollar relative to the other currencies. 1. Exchange rate systems Exchange Rate Systems Freely Managed Description Fixed Floating Float Pegged A system in which exchange rates are held constant 0 O O O A system in which exchange rates are determined by market forces, rather than . . O O O 0 government Intervention A system in which exchange rates are allowed to fluctuate, but are subject to government . . O O O O Intervention A system in which the home currency is synchronized with the value of a particular foreign O O O 0 CU rrency Under a fixed exchange rate, MNCs who deal in that currency v subject to exchange rate risk. The following graph depicts the foreign exchange market for the euro. The demand for euros is represented by the blue line, while the supply of euros is represented by the orange line. Suppose that the federal reserve of the United States wishes to lower the value of the euro relative to the dollar. Shift either the supply curve or the demand curve to reect the monetary policy that the Fed is likely to enact if it uses direct intervention. ('3) O S D E '1' U a o. g s 3 a -+ n: 2) U1 LL 0 Lu 3 D > QUANTITY OF EUROS