Suppose policy makers are pursuing a policy to fix the exchange rate.In such a system with perfect capital mobility,an open market sale of domestic bonds by the domestic central bank will eventually result in
A)a permanent increase in the monetary base.
B)a permanent reduction in the monetary base.
C)a gradual reduction in the domestic interest rate.
D)a change in the composition of the monetary base.

Question

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The Answer of Suppose policy makers are pursuing a policy to fix the exchange rate.In such a system with perfect capital mobility,an open market sale of domestic bonds by the domestic central bank will eventually result in
A)a permanent increase in the monetary base.
B)a permanent reduction in the monetary base.
C)a gradual reduction in the domestic interest rate.
D)a change in the composition of the monetary base.

Suppose Policy Makers Are Pursuing a Policy to Fix the Exchange