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If the Central Bank Buys Foreign Assets

Question 53

Multiple Choice

If the central bank buys foreign assets,


A) the expected rate of return on domestic assets will fall relative to the expected rate of return on foreign assets.
B) the expected rate of return on domestic assets will rise relative to the expected rate of return on foreign assets.
C) the domestic monetary base will decline.
D) the foreign-exchange value of the domestic currency will rise.

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