Question

Assume a central bank exchanges its currency for other foreign currencies in the foreign exchange market, but does not adjust for the resulting change in the money supply. This is an example of:

Answer 1

Answer:

nonsterilized intervention

Explanation:

Based on the information provided within the question it can be said that this scenario is a direct example of nonsterilized intervention. This term refers to when central banks attempt to influence the exchange rates by refusing to buy or sell assets or currencies which in term allows the money supply to stay the same .