The selling of foreign exchange by the central bank has no effect on the domestic money supply.

Name: The selling of foreign exchange by the central bank has no effect on the domestic money supply.
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Question

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The selling of foreign exchange by the central bank results in a decrease in the domestic money supply because it involves the central bank receiving domestic currency in exchange for foreign currency, thereby reducing the amount of money circulating within the domestic economy.

The Selling of Foreign Exchange by the Central Bank Has