Question: 2. In an effort to diversify their foreign reserves, the People's Bank of China has decided to enter into a transaction with a US FX

2. In an effort to diversify their foreign reserves, the People's Bank of China has decided to enter into a transaction with a US FX dealer to sell some of their dollar foreign exchange reserves and purchase Euros: a. what is the impact on the US monetary base? b. the Chinese monetary base

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