1. A balance sheet for the central bank of Romulan Star empire is shown below:

Central Bank Balance Sheet

Assets Liabilities

Foreign assets $1,000 Deposits held by private banks $500

Domestic assets $1,500 Currency in circulation $2,000

Write the new balance sheet with these changes:

a. The bank carries out a sterilized transaction by selling $100 of foreign assets

b. What should the bank do if its intent was to acquire more foreign assets but keep the money supply constant? How would the balance sheet change?

PLEASE ANSWER BOTH