To offset an appreciation of the dollar against the yen,the Federal Reserve would:
A) Sell dollars on the foreign exchange market and lower domestic interest rates
B) Sell dollars on the foreign exchange market and raise domestic interest rates
C) Buy dollars on the foreign exchange market and lower domestic interest rates
D) Buy dollars on the foreign exchange market and raise domestic interest rates

Question

Quizplus · Accepted Answer

To offset an appreciation of the dollar, the Federal Reserve would sell dollars to increase supply and lower domestic interest rates to make the dollar less attractive, thus reducing its value.

To Offset an Appreciation of the Dollar Against the Yen,the