If a Central Bank Conducts Open Market Purchases in the Domestic

Multiple Choice

If a central bank conducts open market purchases in the domestic market at the same time as it intervenes in the foreign exchange market by selling foreign currency, it is

A) working at cross purposes
B) sterilizing the foreign exchange intervention
C) implementing an expenditure reducing policy
D) depreciating its currency while increasing domestic money supply
E) appreciating its currency while decreasing domestic money supply