You have been hired as a Marco Economist by the President of the United States to help evaluate the recent announcement by Federal Reserve chairman Ben Bernanke that the FED will be increasing interest rates again. Ben Bernanke has justied the move on the grounds that the economy continues to be strong. AnSWer the following questions. Provide a graphical explanation for your answers whenever possible. 1. What is the fed trying to do? 8. The exchange rate (the amount of foreign A. slow down the economy currency that a S buys)? B. stimulate the economy A. increase C. remains unchanged B. decrease C. remains unchanged 2. How is the fed doing it? A. buying bonds 9. The US. dollar has? B. selling bonds A. depreciated C. remains unchanged B. appreciated C. remained unchanged 3. What happens to bond prices? A. increase to. The currency in the other country has? B. decrease A. depreciated C. remains unchanged B. appreciated C. remained unchanged 4. What happens to the interest rate? A increase I 1. What impact will this have on exports? 13. decrease A. increase C remains unchanged B. decrease C. remains unchanged 5. What happens to the aggregate Demand curve? A increase (shifts to the right) B. decrease (shifts to the left) 12. What impact will this have on imports? C remains unchanged A. increase B. decrease C. remains unchanged What is the effect on the foreign exchange market (the S market)? 13. What impact does the change in the exchange 6. Demand? rate have on aggregate demand? A. increase (shifts to the right) A. increase (shifts to the right) B. decrease (shifts to the left) B. decrease (shifts to the le) C. remains unchanged C. remains unchanged 7. Supply? 14. What happens to the aggregate supply curve? A. increase (shifts to the right) A. increase (shis to the right) B. decrease (shifts to the left) B. decrease (shis to the left) C. remains unchanged C. remains unchanged