What type of foreign exchange intervention it is

Reference no: EM133461122

Question: Suppose the Federal Reserve purchases $2 million worth of foreign assets.

a) If the Federal Reserve purchases the foreign assets with $2 million in currency from banks, show the effect of this open market operation, using T-accounts. What type of foreign exchange intervention it is and what happens to the monetary base?

b) If the Federal Reserve purchases the foreign assets by selling $2 million in T-bills, show the effect of this open market operation, using T-accounts. What type of foreign exchange intervention it is and what happens to the monetary base?

Reference no: EM133461122

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