Under the direct intervention of government (nonsterilized), the U.S. central bank would “________” in order to...
Under the direct intervention of government (nonsterilized), the U.S. central bank would “________” in order to strengthen Euro, which makes “€ ______ curve”to move.
a. Sell € to buy $; Supply
b. Sell € to buy $; Demand
c. Sell $ to buy €; Demand
d. Sell $ to buy €; Supply
Homework Answers
The solution is part c) sell $ to buy €, demand
This is because for the U.S. central bank to strengthen € ,it has to increase its strength in the financial markets by buying it and for buying it , the bank has to sell $.
Also, whenever we buy something its demand is increased due to the market forces of demand and supply. So buying € will make € demand curve to move.
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