1. A, B.Consider a country whose central bank wants to cause its own currency to appreciate in value, relative to foreign currencies.(Appreciate:You getmoreforeign currency in exchange for your own.)Separatelyanswering as parts A and B, give and explain two different intervention methods to cause the currency to appreciate.Separately explain how each method would work.

C.After the currency has appreciated, due to the official intervention, would inflation, deflation or no domestic price changes, be most likely?(note:No sterilization has taken place in this example.)You may draw upon Irving Fisher's quantity theory of money and/or the Fisher effect and/or PPP to explain the most likely outcome.