An expansion of the domestic money supply can be offset by the sale of foreign reserves. This technique is called:
A) repatriation.
B) revaluation.
C) sterilization.
D) reversion.

Question

Quizplus · Accepted Answer

Sterilization is the process by which the central bank offset the impact of a domestic expansion in the money supply by selling foreign reserves. This helps to prevent inflation and maintain exchange rates. Repatriation and reversion are not accurate terms for this process, while revaluation refers to a change in the exchange rate, which is not necessarily related to the domestic money supply.

An Expansion of the Domestic Money Supply Can Be Offset