A foreign exchange intervention that does not alter the domestic monetary base is:

Question

Quizplus · Accepted Answer

A sterilized foreign exchange intervention is one in which the central bank offsets the impact of the intervention on the domestic monetary base through other transactions, such as buying or selling domestic bonds. This means that the intervention does not affect domestic interest rates or the overall level of money supply in the economy, making it a more controlled and targeted approach. In contrast, an unsterilized intervention directly affects the monetary base and can have broader impacts on the economy. Therefore, choice A is the correct answer.

A Foreign Exchange Intervention That Does Not Alter the Domestic