Question: Please make sure your answer is correct. If the Fed intervenes to support the domestic currency by selling $1 bn of foreign currency reserves, it

Please make sure your answer is correct.

If the Fed intervenes to support the domestic currency by selling $1 bn of foreign currency reserves, it can fully sterilize the intervention by Selling \$1bn of US government bonds Buying \$1bn of US government bonds Selling about $(1/12) bn of US government bonds Buying about $(1/12) bn US government bonds

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