If a Central Bank Were to Undergo Sterilized Foreign Exchange

question 27

Multiple Choice

If a central bank were to undergo sterilized foreign exchange intervention, it would offset an unwanted appreciation of its currency by

• A) selling foreign reserves and selling domestic credit at the same time.
• B) buying foreign reserves and selling domestic credit at the same time.
• C) selling foreign reserves and buying domestic credit at the same time.
• D) buying foreign reserves and buying domestic credit at the same time.
• E) none of the above.

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Definitions:

Beginning Inventory

The value of inventory on hand at the start of an accounting period, consisting of raw materials, work-in-process, and finished goods.

Ending Inventory

The value of goods available for sale at the end of an accounting period, calculated as the sum of beginning inventory plus purchases minus cost of goods sold.

Raw Materials Production Needs

The essentials and quantities of raw materials required to fulfill the production schedule for goods.

Raw Material Purchases

The total cost of materials bought that are intended to be used in the production of goods.