If the Fed Sells $1 Billion of Short-Term Securities Issued

question 67

Multiple Choice

If the Fed sells $1 billion of short-term securities issued by the Bank of Japan and at the same time purchases $1 billion of short-term securities issued by the U.S. Treasury,

• A)the monetary base will decline by $1 billion.
• B)the monetary base will rise by $1 billion.
• C)the Fed has conducted an unsterilized foreign-exchange intervention.
• D)the Fed has conducted a sterilized foreign-exchange intervention.