Question: If the Federal Reserve buys dollars in the foreign exchange market
If the Federal Reserve buys dollars in the foreign exchange market but does not sterilize the intervention, what will be the impact on international reserves, the money supply, and the exchange rate?
Relevant QuestionsFor each of the following, identify in which part of the balance-of-payments account it appears (current account, capital account, or net change in international reserves) and whether it is a receipt or a payment.a. A ...If a country wants to keep its exchange rate from changing, it must give up some control over its money supply. Is this statement true, false, or uncertain? Explain your answer.What are the advantages and disadvantages of a currency board over a monetary policy that just uses an exchange-rate target?Why do companies cut production when they find that their unplanned inventory investment is greater than zero? If they didn't cut production, what effect would this have on their profits? Why? What happens to the position of the LM curve if the Fed decides that it will decrease the money supply to fight inflation and if, at the same time, the demand for money falls?
Post your question