If the goal were to increase the value of a country's currency - to fight an depreciation of the domestic currency in exchange for foreign currency - the central bank would:
A) buy its own currency in exchange for foreign currency.
B) follow a expansive monetary policy.
C) drive real rates of interest down.
D) sell its own currency in exchange for foreign currency.

Question

Quizplus · Accepted Answer

To increase the value of a country's currency and combat depreciation, the central bank would buy its own currency in exchange for foreign currency. This action reduces the supply of the domestic currency in the foreign exchange market, leading to an increase in its value.

If the Goal Were to Increase the Value of a Country's