Impact of an increase in the Fed advances and discounts on monetary base.
Suppose, in a given week, float raises $900 million, Treasury deposits at the Fed rise $1500 million, discounts and advances decline $200 million, and foreign deposits at the Fed increase $150 million. Illustrate what is the net effect of these changes on the monetary base also elucidate what must the Fed do if it desires to maintain the base constant during the week? Explain.