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As a result of the Fed's sale of $4,500 worth of government securities to First Main Street Bank, the bank becomes reserve deficient. Suppose that
As a result of the Fed's sale of $4,500 worth of government securities to First Main Street Bank, the bank becomes reserve deficient. Suppose that Kenji, a First Main Street Bank's customer, re-pays back the $4,500 loan he took out a few months ago. Which of the following most accurately describes First Main Street Bank's actions? The bank keeps the $4,500 as reserves. The bank creates a $420,500 loan. The bank keeps the $1,125 as reserves. The bank creates a $4,500 loan. The money supply in the economy is $
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