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Q1.The media frequently reports that the dollars value strengthened against many currencies in response to the Federal Reserves plan to increase interest rates. Explain why the dollars value may change even before the Federal Reserve affects interest rates.

Q2.Assume there is concern that the United States may experience a recession. How should the Federal Reserve influence the dollar to prevent a recession? How might U.S. exporters react to this policy (favorably or unfavorably)? What about U.S. importing firms?

Answer these 2 question above and provide references

1. Assume that substantial capital flows occur between the United States, Country A, and Country B, in all directions.If interest rates in Country A decline, how could this affect the value of Currency A against the dollar?How might this decline in Country As interest rates possibly affect the value of Currency B against the dollar?
2. The currencies of some Latin American countries depreciate against the U.S. dollar on a daily basis.What do you think is the major factor that places such severe downward pressure on the value of these currencies?What obvious change in Latin American economic policy is needed to prevent further depreciation of Latin American currencies?
3. In the 1990s, Russia was attempting to import more goods but had little to offer other countries in terms of potential exports.In addition, Russias inflation rate was high.Explain the type of pressure that these factors placed on the Russian currency.
4. Analysts commonly attribute the appreciation of a currency to expectations that economic conditions will strengthen.Yet, this chapter suggests that when other factors are held constant, increased national income could increase imports and cause the local currency to weaken.In reality, other factors are not constant.What other factor is likely to be affected by increased economic growth, and could place upward pressure on the value of the local currency?

Answer 2 Question from this 4 and provide reference