Suppose the central bank does not play by the ldquorules of


Suppose the Central Bank does not play by the “rules of the game”, but instead attempts to sterilize the gold inflows. (Note: in that sentence, I gave a major hint about question 2.)

a. Define sterilization.

b. Illustrate how a Central Bank sterilizes a gold outflow using a Central Bank T-account.

c. Explain why a Central Bank would sterilize the gold outflow.

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Business Economics: Suppose the central bank does not play by the ldquorules of
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