When the Fed sells bonds in the open market, we can expect:

Select one:

a.

bond prices and interest rates to fall.

b.

bond prices to rise and interest rates to fall.

c.

bond prices to fall and interest rates to rise.

d.

bond prices and interest rates to rise.

When the Fed sells bonds in the open market, we can expect the:

Select one:

a.

exchange rate to rise and interest rates to fall.

b.

exchange rate and interest rates to rise.

c.

exchange rate to fall and interest rates to rise.

d.

exchange rate and interest rates to fall.

Holding all else constant, higher interest rates in the United States would ________ the demand for U.S. dollars in the foreign exchange market. In turn, this will lead to a/an _______ in the exchange rate, and subsequently, U.S. net exports would _______.

Select one:

a.

decrease; decrease; rise

b.

increase; increase; fall

c.

increase; decrease; rise

d.

decrease; increase; fall

Which of the following result from a change in the money supply brought about by an open market sale?

Select one:

a.

lower interest rate, higher exchange rate, decreased demand for investment and net exports

b.

higher interest rate, higher exchange rate, decreased demand for investment and decreased demand for net exports

c.

lower interest rate, lower exchange rate, increased demand for investment and net exports

d.

higher interest rate, lower exchange rate, decreased demand for investment and increased demand for net exports