Explain How a Central Bank Would Engage in Direct Intervention

question 40

Essay

Explain how a central bank would engage in direct intervention to decrease the value of its domestic currency. Since the 1970s, it has been difficult for central banks alone to engage in direct intervention to alter the value of their domestic currency. Identify and explain at least two other activities in which a central bank could engage to alter the value of their domestic currency.

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Definitions:

Variability

The extent to which data points in a statistical distribution or set differ from each other and from the mean or average.

Mean

The average of a set of numbers, calculated by dividing the sum of all numbers by the count of numbers.

Range

The difference between the highest and lowest values in a set of data.

Standard Deviation

A measure that quantifies the amount of variation or dispersion of a set of data values, showing how much variation there is from the mean.