Suppose a Central Bank Prevents an Appreciation of Its Currency

question 71

Multiple Choice

Suppose a central bank prevents an appreciation of its currency by intervening in the foreign exchange market and selling its currency for foreign currency.This causes the

• A) domestic money supply to decrease and a decline in aggregate demand
• B) domestic money supply to increase and a decline in aggregate demand
• C) domestic money supply to decrease and a rise in aggregate demand
• D) domestic money supply to increase and a fall in aggregate demand

---

Definitions:

Wheat

A cereal grain that is one of the most widely cultivated crops worldwide, used as a staple food in many cultures for its versatility and nutritional value.

Fertilizer

A chemical or natural substance added to soil or land to increase its fertility and enhance plant growth.

Plasma Screen TVs

Television displays that use plasma technology to produce images, known for their bright displays and wide viewing angles.

Supply

The total amount of a product or service available for purchase at any given time or price.