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1. [8 pts] Use the central bank balance sheet below. Show what happens to the totals and each part of the balance sheet when the

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1. [8 pts] Use the central bank balance sheet below. Show what happens to the totals and each part of the balance sheet when the central bank performs a $200 foreign asset sale using currency and a $200 domestic asset purchase using currency. Is this a sterilized transaction? Why or why not? Assets Liabilities Foreign assets $1000 $500 Deposits held by private banks Currency in circulation Domestic assets $1500 $2000 Total $2500 Total $2500

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