1. Assume the FED purchases 1.0 bi. Euro from U.S. Banks (at the 1:1 ratio dollars to euros) that hold Euro deposits with their Euro-area correspondent bank. As a result of this transaction: A. Euro banks reserve deposits at the ECB rise by 1.0 bi. Euro. B. Europes monetary base increases by 1.0 bi. Euro. C. U.S. bank reserve deposits at the FED rise by $1.0 bi. dollars. D. The U.S. monetary base falls by $1.0 bi. dollars.

2. Assume the ECB purchases 100.0 bi. Yen from Euro Banks (at the 1:100 ratio euros to yen) that hold yen deposits with their Japanese-area correspondent bank. As a result of this transaction: A. Japanese banks reserve deposits at the BoJ rise by 100.0 bi. Yen. B. Japans monetary base decreases by 100.0 bi. Yen. C. European bank reserve deposits at the ECB fall by 1.0 bi. Euros. D. The European monetary base falls by 1.0 bi. Euros.

3. Assume the ECB purchases by check 100.0 bi. Yen directly from Japanese Banks (at the 1:100 ratio euros to yen). Also, assume that Japanese banks collect the funds by sending the ECB checks for deposit. As a result of this transaction: A. ECB deposits at the BoJ decrease by 100.0 bi. Yen. B. The Euro areas bank reserves and monetary base rise by 1.0 bi. Euros. C. Japanese banks reserves and monetary base both increase by 100.0 bi. Yen. D. All of the above.