Which of the following is true?
A)When the Fed participates in an intervention, it does so by purchasing or selling dollars for other foreign currencies.
B)Reserves are augmented when the Fed sells foreign currencies in exchange for dollars.
C)Reserves are decreased when the Fed sells dollars in exchange for foreign currencies that it has previously accumulated.
D)Sterilization will insure that a foreign exchange operation affects the monetary base.

Question

Quizplus · Accepted Answer

When the Fed intervenes in the foreign exchange market, it typically buys or sells dollars in exchange for foreign currencies to influence exchange rates.

Which of the Following Is True