If a Central Bank Conducts Open Market Purchases in the Domestic

question 31

Multiple Choice

If a central bank conducts open market purchases in the domestic market at the same time as it intervenes in the foreign exchange market by selling foreign currency, it is

• A)working at cross purposes
• B)sterilizing the foreign exchange intervention
• C)implementing an expenditure reducing policy
• D)depreciating its currency while increasing domestic money supply
• E)appreciating its currency while decreasing domestic money supply