Everything else held constant,if a central bank makes an unsterilized ________ of foreign assets,then the domestic money supply will ________ and the domestic currency will appreciate.

Question

Quizplus · Accepted Answer

An unsterilized sale of foreign assets by a central bank reduces the domestic money supply because it involves selling foreign assets in exchange for domestic currency, which is then removed from circulation. This reduction in the money supply leads to an appreciation of the domestic currency.

Everything Else Held Constant,if a Central Bank Makes an Unsterilized