A central bank sale of ________ to purchase ________ in the foreign exchange market results in an equal decline in its international reserves and the monetary base.

Question

Quizplus · Accepted Answer

A central bank sale of foreign assets to purchase domestic currency in the foreign exchange market results in an equal decline in its international reserves (because it is using those reserves to make the purchase) and the monetary base (because it is effectively removing domestic currency from circulation, which reduces the amount of money available in the economy).

A Central Bank Sale of ________ to Purchase ________ in the Foreign

A Central Bank Sale of to Purchase in the Foreign