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Small Mahtab Leghari

Budget: $15

Solved!

The central bank holds a large amount of government bonds from the state of Taz. The state of Taz then undergoes a severe depression and cannot pay back the money owed. What happens to the central bank’s balance sheet?

Answer

Small Tutor Gautham Shiyakino

Bonds are the CBs assets. If the state of Taz cannot pay back the money owed, the...