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1. Explain how bank regulators face a paradox regarding preventing monopoly power by banks and spurring competition. 2. Follow a $1billion purchase of U.S. Treasury
1. Explain how bank regulators face a paradox regarding preventing monopoly power by banks and spurring competition.
2. Follow a $1billion purchase of U.S. Treasury bonds by the Federal Reserve from commercial banks. Discuss the changes that occur to the balance sheet of the banking system and the balance sheet of the Fed.
3. Discuss why the discount rate may be considered a penalty rate of interest charged to banks.
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