An increase in the country's stock of official foreign exchange
reserves leads to
1. an increase in the domestic stock of base
money unless the central bank sells an equivalent amount of domestic
bonds.
2. an increase in the domestic stock of base
money no matter what else the authorities do.
3. an increase in domestic high-powered money
if the central bank sterilizes its effect on reserve holdings.
4. all of the above.
Choose the correct option.