Depreciation of the dollar will: Decrease the price of both imports to and exports from theUnited States. Increase the price of both imports to and exports from theUnited States. Increase the price of the goods imported into the United Statesand decrease the price to foreigners of U.S. exports. Decrease the price of imports into the United States andincrease the prices to foreigners of U.S. exports. 2) Which of the following occurs when the FEDundertakes policies which increase interest rates in the UnitedStates? The demand for dollars increases and then the supply of dollarsdecreases. Both the supply and demand for dollars decrease. Both the supply and demand for dollars increase. The supply of dollars increases and the demand for dollarsdecreases. 3) Suppose that monetary policy in the UnitedStates leads to an increase in interest rates relative to those inJapan. Which of the following will occur in the capitalaccount? The dollar will depreciate relative to the yen. The dollar will appreciate relative to the yen. The supply of dollars will increase. The demand for yen will increase. 4) Restrictive monetary policy by the Fedshould lead to: An increase in investment and an increase in aggregatedemand. A decrease in investment and an increase in aggregatedemand. A decrease in investment and a decrease in aggregatedemand. Leave investment unchanged but decrease aggregate demand. 5) An expansionary monetary policy by the Fedwould tend to: Lower the U.S. inflation rate, make exports more expensive,make imports cheaper, and lower the value of the dollar. Lower the U.S. inflation rate, make exports cheaper, makeimports more expensive, and raise the value of the dollar. Raise the U.S. inflation rate, make exports cheaper, makeimports more expensive, and raise the value of the dollar. Raise the U.S. inflation rate, make exports more expensive,make imports cheaper, and lower the value of the dollar. 6) An expansionary monetary policy by the Fedwould be expected to: Raise domestic income, reduce imports, and increase the currentaccount trade deficit. Raise income, raise imports, and increase the current accounttrade deficit. Reduce income, reduce imports, and reduce the tradedeficit. Reduce income, raise imports, and reduce the tradedeficit. 7) If the dollar is depreciating more thandesired, an appropriate policy by the Federal Reserve Board tosupport the value of the dollar would be: A tax cut. An increase in U.S. interest rates. An expansionary monetary policy. Printing money.