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Suppose the following four steps are taken with respect to monetary operations: The central bank conducts $180 million of open market purchases of government bonds
Suppose the following four steps are taken with respect to monetary operations:
- The central bank conducts $180 million of open market purchases of government bonds from banks
- The government deposits $30 million at the central bank
- A private company receives $200 million due to its export of an airplane. The central bank maintains a fixed exchange rate regime so fully offsets the potential impact of the private companys receipt on the foreign exchange market.
- Separate from the open market purchase of government bonds mentioned in step i. above, the central bank decides it wants to sterilize half of the action it takes in step iii. through domestic open market operations (via government bonds).
Given all four steps, what is the change in the monetary base and each of its components?
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