Assume That the Dollar Has Been Consistently Depreciating Over a Long

Multiple Choice

Assume that the dollar has been consistently depreciating over a long period. The Fed decides to counteract this movement by intervening in the foreign exchange market using sterilized intervention. The Fed would:

A) buy dollars with foreign currency and simultaneously sell Treasury securities for dollars.
B) buy dollars with foreign currency and simultaneously buy Treasury securities with dollars.
C) sell dollars for foreign currency and simultaneously sell Treasury securities for dollars.
D) sell dollars for foreign currency and simultaneously buy Treasury securities with dollars.
E) None of these are correct.