If the Fed purchases $100 million worth of euros, the monetary base will

Name: If the Fed purchases $100 million worth of euros, the monetary base will
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Question

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When the Fed purchases $100 million worth of euros, it is essentially creating new money by increasing the monetary base. This is because the Fed pays for the euros with newly created reserves, which become part of the monetary base. Therefore, the monetary base will increase by $100 million.

If the Fed Purchases $100 Million Worth of Euros, the Monetary