Which of the following is an example of an unconventional ...

[debasdf]

Which of the following is an example of an unconventional monetary policy by a central bank?
 
  A) The purchase of specific categories of assets with new money.
  B) The sale of long-term government bonds for foreign exchange.
  C) the purchase of long-term government bonds using foreign exchange.
  D) raising reserve requirements by commercial banks.
  E) selling gold reserves.

Question 2

Does it appear that currency boards make low-inflation policies credible?
 
  What will be an ideal response?

[qytan]

Answer to Question 1

A

Answer to Question 2

Currency boards have the power to bring in anti-inflation credibility from the country to which the domestic currency is hook. Currency boards typically may not acquire government debt, but it can discourage fiscal deficits leading to reduce a major cause of inflation and devaluation. In order for a currency board to be successful is by increasing the banking sector and that can get the government under pressure to abandon the currency board. Moreover if the markets anticipate that the government is leaving the currency boar, the country may not benefit from the potential of a currency board.