Suppose a Central Bank Prevents a Depreciation of Its Currency

question 60

Multiple Choice

Suppose a central bank prevents a depreciation of its currency by intervening in the foreign exchange market and buying its currency with foreign currency.Other things equal, this also causes the

• A) domestic money supply to decrease and a decline in aggregate demand.
• B) domestic money supply to increase and a decline in aggregate demand.
• C) domestic money supply to decrease and a rise in aggregate demand.
• D) domestic money supply to increase and a rise in aggregate demand.

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Definitions:

Blue

A primary color that is perceived when light with a dominant wavelength between approximately 450 and 495 nanometers is detected by the human eye.

Green

A color in the spectrum visible to the human eye, associated with nature, growth, and fertility.

Sensory Receptors

Cells or organs located throughout the body that respond to specific stimuli from the external or internal environment, enabling the senses of sight, hearing, touch, taste, and smell.

Light

The natural agent that stimulates sight and makes things visible, consisting of electromagnetic radiation that is visible to the human eye.