1. The yield offered on government bonds in different countries in the eurozone (are or are...

1. The yield offered on government bonds in different countries in the eurozone (are or are not) always the same, due to the presence of (exchange rate risk or credit risk).

2. Suppose that the U.S. Federal Reserve wishes to influence the value of the dollar to stimulate the economy.

If the Fed uses direct intervention to achieve this goal, it will seek to (Weaken or strengthen) the dollar. In doing so, this direct intervention may very well (Increase or Decrease) inflation since domestic producers will be (Less or More) likely to raise their prices.

Expert Solution

1. NOT ALWAYS SAME, PRESENCE OF CREDIT RISK- Government Bonds are offering different yield because of different credit risk

2. WEAKEN- Federal Reserve will weaken the dollar

INCREASE- weakening of dollar mean increasing of inflation

MORE- prices will rise

jeff jeffy answered 2 years ago

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