An increase in business optimism in Maxistan has changed the real interest rate in Maxistan which has resulted in a change in the flow of financial assets between Maxistan and its trading partners and impacted the value of Maxistan's currency.
Which of the following describes an appropriate action that the central bank of Maxistan could take to offset the change in the value of Maxistan's currency?
Choose 1 answer:
(A) Buy its currency or sell another country's currency.
(B) Increase interest payments made on excess reserves held by banks
(c) Increase the demand for money
(D) Sell its currency or buy another country's currency.
(E) Sell bonds
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