- CFA Exams
- CFA Level I Exam
- Topic 2. Economics
- Learning Module 8. Currency Exchange Rates: Understanding Equilibrium Value
- Subject 7. Exchange Rate Management: Intervention and Controls
CFA Practice Question
Which statement is true regarding the effectiveness of central bank intervention?
B. Some studies find that compared to their developed country counterparts, EM policymakers can exert a bigger influence on the level and path of their exchange rates.
C. A study by Magud, Reinhard and Rogoff concludes that capital controls on inflows make monetary policy more dependent on a country's FX policy.
A. Central bank intervention can be very effective in developed countries due to their well-developed financial markets.
B. Some studies find that compared to their developed country counterparts, EM policymakers can exert a bigger influence on the level and path of their exchange rates.
C. A study by Magud, Reinhard and Rogoff concludes that capital controls on inflows make monetary policy more dependent on a country's FX policy.
Correct Answer: B.
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