Assume that the Fed intervenes by exchanging euros for dollars in the foreign exchange market. This will cause an in the supply of euros in the foreign exchange market, and will place ___ pressure on the value of the euro.
a. outward shift; downward.
b. inward shift; downward.
c. inward shift; upward.
d. outward shift; upward.

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09-03-2022
Business

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Assume that the Fed intervenes by exchanging euros for dollars in the foreign exchange market. This will cause an in the supply of euros in the foreign exchange market, and will place ___ pressure on the value of the euro.
a. outward shift; downward.
b. inward shift; downward.
c. inward shift; upward.
d. outward shift; upward.

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ewomazinoade ewomazinoade · Answer 1 · 2022-03-21T10:18:20+01:00

The action of the Fed would lead to an outward shift in the supply of euros in the foreign exchange market, and will place downward pressure on the value of the euro.

What is the impact of the action of the Fed?

When the Fed exchanges euros for dollars, it means that they are selling euros and buying dollars. As a result, the supply of euros increases. This leads to an outward shift of the supply of euros and a decline the value of euros.

Thus, the value of the euro would depreciate while the value of the dollar would appreciate.

To learn more about depreciation, please check: https://brainly.com/question/25552427