If the Fed sells foreign assets, the monetary base will
A) fall by the amount of the sale, only if the Fed buys domestic bank deposits with the proceeds.
B) fall by the amount of the sale, only if the Fed buys domestic currency with the proceeds.
C) fall by the amount of the sale, whether the Fed buys domestic bank deposits or domestic currency with the proceeds.
D) rise by the amount of the sale.
C
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Gross investment is equal to
A) depreciation minus net investment. B) net investment plus capital stock. C) depreciation plus net investment. D) net investment minus capital stock.
A tariff disrupts the workings of the law of one price because tariffs:
A. are only applied to commodity products. B. are taxes on imports and can vary across products and countries. C. apply only to goods countries export. D. are standardized by GATT.