A sterilized foreign exchange intervention always a

4. A sterilized foreign exchange intervention always _________.
(a) increases the money supply
(b) involves the sale of foreign assets
(c) leaves the money supply unchanged
(d) involves the sale of domestic assets
5. Under fixed exchange rate regime, what is the effect of fiscal contraction, if the central bank
refrain from intervening in the foreign exchange market?
6. If people expect the domestic currency will be devalued against foreign currency in the near
future, they will immediately shift from ________ currency to _______ currency, causing an
immediate __________ of the foreign currency.
7. The reduction in the value of a currency due to market forces is known as _______.

8. When the Reserve Bank of Australia (RBA) purchases a government bond in the open
market ________.
(a) reserves in the banking system increases
(b) RBA liabilities remain unchanged
(c) RBA liabilities decline
(d) reserves in the banking system decline