Which of the following is NOT a good reason for a central bank to intervene in foreign exchange markets?
A)lowering of domestic inflation by currency appreciation
B)prevention of domestic currency depreciation
C)offsetting a temporary change in trade patterns
D)achieving an internal balance
E)smoothing unstable exchange rate expectations

Question

Quizplus · Accepted Answer

Achieving an internal balance is more directly related to domestic fiscal and monetary policies rather than foreign exchange interventions. Internal balance refers to the optimal combination of employment and price stability within a country, which central banks typically aim to achieve through interest rates and controlling the money supply, not by intervening in foreign exchange markets.

Which of the Following Is NOT a Good Reason for a Central