If the Fed Sells Foreign Assets, the Monetary Base Will

question 66

Multiple Choice

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.

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Definitions:

17th Monthly Payment

Refers to the seventeenth installment in a series of scheduled payments, typically within a loan or mortgage plan.

Compounded Monthly

This refers to the process of adding interest to the principal balance of a loan or investment on a monthly basis.

Amortized

The gradual reduction of a debt over a period of time by making regular payments of interest and principal.

31st Payment

The payment made as the thirty-first installment in a series of payments or financial obligations.