When a central bank intervenes in the foreign exchange market to purchase a foreign currency, the transaction:
a. Increases the nation's monetary base and increases the reserves account in the balance of payments.
b. Decreases the nation's monetary base and increases the reserves account in the balance of payments.
c. Decreases the nation's monetary base and decreases the reserves account in the balance of payments.
d. Changes neither the monetary base nor the reserves account.
e. Increases the nation's monetary base and decreases the reserves account in the balance of payments.
Question 2
A clear conclusion from offshoring debates and analyses is that:
a. Offshoring increases overall unemployment in the nation from which offshoring takes place.
b. Offshoring's main effect is to decrease GDP in the nation from which offshoring takes.
c. Offshoring could increase or decrease unemployment in the nation from which it takes place; the result depends on the circumstances.
d. Offshoring results in net losses to the global economic community.
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