In order to boost the value of the DM relative to the dollar
A)the Fed should sell dollars for DM and the Bundesbank should buy DM with dollars
B)the Fed should sell dollars for DM and the Bundesbank should buy dollars with DM
C)the Fed should sell DM for dollars and the Bundesbank should sell dollars for DM
D)the Fed should sell DM for dollars and the Bundesbank should buy DM with dollars

Question

Quizplus · Accepted Answer

To boost the value of the DM relative to the dollar, both central banks should act in a way that increases demand for the DM and decreases demand for the dollar. This is achieved when the Fed sells dollars to buy DM, and the Bundesbank buys DM with dollars, both actions increasing demand for DM and reducing demand for dollars, thus boosting the value of the DM relative to the dollar.

In Order to Boost the Value of the DM Relative