Show the changes to the T-accounts for the Federal Reserve and for commercial banks when the Federal

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Show the changes to the T-accounts for the Federal Reserve and for commercial banks when the Federal Reserve sells

$30 million in U.S. Treasury bills. If the public holds a fixed amount of currency (so that all new loans create an equal amount of checkable bank deposits in the banking system) and the minimum reserve ratio is 5%, by how much will checkable bank deposits in the commercial banks change? By how much will the money supply change? Show the final changes to the T-account for the commercial banks when the money supply changes by this amount.

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Essentials Of Economics

ISBN: 9781319221317

5th Edition

Authors: Paul Krugman, Robin Wells

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