When the Reserve Bank of India purchases foreign exchange (such as US Dollars) from the domestic market to prevent the appreciation of the Indian Rupee, what is the immediate impact on its balance sheet and domestic liquidity?

Options:

• A: RBI's foreign currency assets increase, domestic currency liabilities decrease, and domestic liquidity remains unchanged.
• B: RBI's foreign currency assets decrease, domestic currency liabilities decrease, and domestic liquidity contracts.
• C: RBI's foreign currency assets increase, domestic currency liabilities (reserve money) increase, and domestic liquidity expands.
• D: RBI's foreign currency assets decrease, domestic currency liabilities increase, and domestic liquidity expands.

Related Practice Questions:

• Let $S_1$ and $S_2$ be two disjoint, non-empty convex sets in $\mathbb{R}^n$. Under which of the following conditions is there guaranteed to exist a hyperplane that strictly separates $S_1$ and $S_2$?
• Let the primal linear programming problem be: Maximize $Z = c^T x$ subject to $Ax \le b, x \ge 0$. If this primal problem has an unbounded optimal objective value, then which of the following statements is always true regarding its dual problem?
• Let $S = \{(x, y) \in \mathbb{R}^2 \mid x^2 + y^2 \le 9\}$ be a convex set in $\mathbb{R}^2$. The set of all extreme points of $S$ is given by:
• In a linear programming problem with $3$ independent equality constraints and $5$ variables (including slack/surplus variables), what is the maximum possible number of basic solutions?