Which of the following may be a consequence of a STRONG currency?

Group of answer choices

A strong home currency may lead to higher inflation.

A strong home currency stimulates foreign demand for domestic products.

A strong home currency increases the purchasing power of domestic consumers and firms (i.e., ability to buy goods from other countries).

A strong home currency may boost domestic employment.

Question

Which of the following intervention efforts represents direct intervention by the U.S. government?

The Federal Reserve increases the target for the inflation rate by two percentage points.

To boost the value of the Canadian dollar, the Federal Reserve exchanges U.S. dollars for Canadian dollars.

The U.S. government imposes restrictions on exchanging Canadian dollars for U.S. dollars.

The Federal Reserve announces that it is strongly considering intervening in the foreign exchange markets.

The Federal Reserve decreases U.S. short-term interest rates.