603 #
© 2014 Pearson Canada Inc.#- Everything else held constant, if a central bank makes an unsterilized sale of foreign assets,
then the domestic money supply will ____ and the domestic currency will ____.
A) increase; appreciate
B) increase; depreciate
C) decrease; appreciate
D) decrease; depreciate
Answer: C
Diff: 1 Type: MC Page Ref: 494 - 495
Skill: Recall
Objective List: 20.1 Describe central bank intervention in the foreign exchange market and its
effects on the money supply and the exchange rate
1 1) Everything else held constant, if a central bank makes an unsterilized ____ of foreign
assets, then the domestic money supply will decrease and the domestic currency will ____.
A) purchase; appreciate
B) purchase; depreciate
C) sale; appreciate
D) sale; depreciate
Answer: C
Diff: 1 Type: MC Page Ref: 494 - 495
Skill: Recall
Objective List: 20.1 Describe central bank intervention in the foreign exchange market and its
effects on the money supply and the exchange rate
- Everything else held constant, if a central bank makes an unsterilized ____ of foreign
assets, then the domestic money supply will ____ and the domestic currency will
depreciate.
A) purchase; increase
B) purchase; decrease
C) sale; increase
D) sale; decrease
Answer: A
Diff: 1 Type: MC Page Ref: 494 - 495
Skill: Recall
Objective List: 20.1 Describe central bank intervention in the foreign exchange market and its
effects on the money supply and the exchange rate