There Are Limits to the Ability of Monetary Authorities to Use

Multiple Choice

There are limits to the ability of monetary authorities to use sterilized intervention in the case of a deficit because:

A) the central bank may be unwilling to increase its holdings of foreign currency beyond a certain limit.
B) the pressure from foreign countries to allow the domestic currency to appreciate will lead to large losses.
C) the central bank's ability to constantly obtain foreign currency for the sterilized intervention is constrained.
D) the export level is fixed and it cannot be allowed to drop.