An Unsterilized Intervention in Which the Central Bank Sells Foreign

question 91

Multiple Choice

An unsterilized intervention in which the central bank sells foreign assets to purchase domestic currency will result in

• A)higher domestic interest rates.
• B)lower domestic interest rates.
• C)an increase in the money supply.
• D)lower domestic interest rates and an increase in the money supply.

---

Definitions:

Interpretation

A way of understanding, a view of a set of facts, from a certain perspective.

Universal Causality

The philosophical concept that every event or action results from preceding events in accordance with the laws of nature.

Equal and Opposite Reaction

Newton's third law of motion, which states that for every action, there is an equal and opposite reaction.

Two-World Hypothesis

A philosophical or theoretical postulate suggesting the existence of two distinct realms or worlds, often used to differentiate between the physical and the non-physical (e.g., the material and the spiritual or the ideal).