A Sterilized Intervention Will Not Affect the Exchange Rate If

question 38

Multiple Choice

A sterilized intervention will not affect the exchange rate if

• A)capital controls are in place.
• B)domestic and foreign assets are perfect substitutes.
• C)domestic assets are more liquid than foreign assets.
• D)domestic assets are less liquid than foreign assets.

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Definitions:

Absolute

A term indicating complete or total, often used to signify purity, unconditioned reality, or an unchangeable fact.

Competitive

Describes a situation where businesses or individuals contest against each other to achieve leadership, market share, or win over customers.