Action by a Central Bank to Offset the Effect of a Foreign

question 31

Multiple Choice

Action by a central bank to offset the effect of a foreign exchange intervention,on the domestic money supply,by using the open-market operations is known as:

• A) Monetary protectionism
• B) Sterilized intervention
• C) Currency creation
• D) Injecting money supply

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Definitions:

Equilibrium Price

The price at which the quantity of a good or service demanded by consumers equals the quantity supplied by producers, resulting in market stability.

Demand Decrease

A downward shift in the demand curve for a product, indicating that consumers now desire less of it at every price.

Supply Increase

A rise in the quantity of a product or service that is available for purchase, which can affect market prices and demand levels.

Equilibrium Price

The price at which the quantity of a good or service demanded equals the quantity supplied, resulting in market equilibrium.