Chapter 17 - The Central Bank Balance Sheet and the Money Supply Process
7.The U.S. Treasury maintains accounts at commercial banks. What would be the consequences if the Treasury shifted funds from one of those banks to the Fed?
8.Suppose the Fed buys $1 billion in Japanese yen, paying in dollars. What is the impact on the monetary base? What would the Fed need to do to keep the monetary base from changing following the purchase?
9.*Explain how an absence of understanding in the U.S. of the relationship between the central bank’s balance sheet and the money supply contributed to the Great Depression. How did the Fed’s behavior during the financial crisis of 2007-2009 illustrate that it had learned a valuable lesson from the Great Depression?