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Suppose that the Fed Reserve conducts sterilized foreign exchange intervention of purchasing $500 million of foreign assets. As a result, 00000 monetary base increases by $500 million. the Fed's domestic asset holdings increase by $500 million total liabilities on the Fed's balance sheet will be unaffected. total money supply increases by $500 million. total assets on the Fed's balance sheet increase by $500 million.

Suppose that the Fed Reserve conducts sterilized foreign exchange intervention of purchasing $500 million of foreign assets. As a result, 00000 monetary base increases by $500 million. the Fed's domestic asset holdings increase by $500 million total liabilities on the Fed's balance sheet will be unaffected. total money supply increases by $500 million. total assets on the Fed's balance sheet increase by $500 million.

Essentials of Economics (MindTap Course List)
Essentials of Economics (MindTap Course List)
8th Edition
ISBN:9781337091992
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter21: The Monetary System
Section: Chapter Questions
Problem 7PA
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Suppose that the Fed Reserve conducts sterilized foreign exchange intervention of purchasing $500 million of foreign assets. As a result, O O O O O monetary base increases by $500 million. the Fed's domestic asset holdings increase by $500 million. total liabilities on the Fed's balance sheet will be unaffected. total money supply increases by $500 million. total assets on the Fed's balance sheet increase by $500 million.
Transcribed Image Text:Suppose that the Fed Reserve conducts sterilized foreign exchange intervention of purchasing $500 million of foreign assets. As a result, O O O O O monetary base increases by $500 million. the Fed's domestic asset holdings increase by $500 million. total liabilities on the Fed's balance sheet will be unaffected. total money supply increases by $500 million. total assets on the Fed's balance sheet increase by $500 million.
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