Assume a central bank exchanges its currency for other foreign currencies in the foreign exchange market, but does not adjust for the resulting change in the money supply. This is an example of:

Question

Quizplus · Accepted Answer

Nonsterilized intervention refers to when a central bank intervenes in the foreign exchange market by buying or selling its currency without offsetting the impact on the money supply. This can have an impact on the exchange rate and inflation in the economy.

Assume a Central Bank Exchanges Its Currency for Other Foreign