Question

To force the value of the British pound to depreciate against the dollar, the Federal Reserve should: Group of answer choices sell dollars for pounds in the foreign exchange market and the Bank of England should sell dollars for pounds in the foreign exchange market. sell pounds for dollars in the foreign exchange market and the Bank of England should sell pounds for dollars in the foreign exchange market. sell dollars for pounds in the foreign exchange market and the Bank of England should sell pounds for dollars in the foreign exchange market. sell pounds for dollars in the foreign exchange market and the Bank of England should sell dollars for pounds in the foreign exchange market.

Answer 1

sell pounds for dollars in the foreign exchange market and the Bank of England should sell pounds for dollars in the foreign exchange market.

Step-by-step explanation:

The Federal Reserve System ( popularly referred to as the 'Fed') was created by the Federal Reserve Act, passed by the U.S Congress on the 23rd of December, 1913. The Fed began operations in 1914 and just like all central banks, the Federal Reserve is a United States government agency.

Generally, it comprises of twelve (12) Federal Reserve Bank regionally across the United States of America.

Depreciation can be defined as the reduction of cost of a fixed asset systematically until the value of the asset becomes zero.

A foreign exchange market can be defined as type of market in which the currency of one country is converted into that of another country.

For example, the conversion of dollars of the United States of America can be converted into Pounds (British) at the foreign exchange market.

Hence, to force the value of the British pound to depreciate against the dollar, the Federal Reserve should sell pounds for dollars in the foreign exchange market and the Bank of England should sell pounds for dollars in the foreign exchange market.