What happens to the monetary base if the domestic currency is undervalued (the central bank fixed the exchange rate below equilibrium) and the central bank intervenes to fix the exchange rate at its current level?
a. The change in the monetary base is ambiguous.
b. The monetary base is only affected by interventions of the central bank when the domestic currency is overvalued.
c. The monetary base will rise.
d. The monetary base is never affected by interventions of the central bank.
e. The monetary base will fall.
.C
Economics
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