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Consider a country that has a local currency known as the dollar and its money supply is $1,500 million, and its domestic credit is equal

Consider a country that has a local currency known as the dollar and its money supply is $1,500 million, and its domestic credit is equal to $1,000 million in the year 2019. The country maintains a fixed exchange rate system, the central bank monetizes any government budget deficit, and prices are sticky.

  1. Suppose the government runs a deficit of $200 million each year from this point forward. What will eventually happen to the central bank's reserves?

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