An Unsterilized Intervention in Which Domestic Currency Is Sold to Purchase

question 54

Multiple Choice

An unsterilized intervention in which domestic currency is sold to purchase foreign assets leads to

• A) a gain in international reserves.
• B) an increase in the money supply.
• C) an appreciation in the domestic currency.
• D) all of the above.
• E) only A and B of the above.

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Definitions:

Perfect Competition

Perfect competition describes a market structure where numerous small firms compete against each other, and goods are homogeneous, leading to no single firm having market power and prices being determined purely by supply and demand.

Economic Profits

The excess of total revenues over total costs, including both explicit and implicit costs.

Perfect Competition

An ideal market structure characterized by infinite buyers and sellers, identical products, and no barriers to entry or exit.

Perfect Competition

A market structure characterized by many sellers and buyers, homogenous products, and no barriers to market entry or exit, leading to optimal pricing and efficiency.