Suppose that the Bank of Japan buys U.S. dollar assets with yen-denominated assets. Everything else held constant,this transaction will cause ________ in the foreign assets held by the Federal Reserve and ________ in the U.S. monetary base.

Question

Quizplus · Accepted Answer

When the Bank of Japan buys U.S. dollar assets, it increases the foreign assets held by the Federal Reserve. This transaction also increases the U.S. monetary base because it involves the exchange of yen for dollars, effectively injecting more dollars into the U.S. economy.

Suppose That the Bank of Japan Buys U