(Solved): 3. Japanese Yen to US dollar reached a historic low in recent decades. Japanese government worries ...

3. Japanese Yen to US dollar reached a historic low in recent decades. Japanese government worries about the strong Yen. (10 marks) a. If the Japanese central bank purchases the foreign assets with \( 20,000,000,000 \) Yen in currency, show the effect of this open market operation, using \( \mathrm{T} \) accounts. What happens to the monetary base? How the exchange rate of Yen to US dollar will be affected? (5 marks) b. If the Japanese central bank sell \( 20,000,000,000 \) Yen of Japanese Government Bonds to the Japanese banks, show the effect of this open market operation, using T-accounts. What happens to the monetary base? (5 marks)