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Suppose that for every open-market operation in the amount of $1, money supply increases by $3, i.e., an open-market purchase of $1 will increase money

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Suppose that for every open-market operation in the amount of $1, money supply increases by $3, i.e., an open-market purchase of $1 will increase money supply by $3 and an open-market sale of $1 will reduce money supply by $3. This means that money multiplier is xed and is equal to 3. The Fed's balance sheet is Federal Reserve Bank Assets Liabilities Securities S 900 Currency held by nonbank public 3 700 Sold 100 Vault cash held by banks 100 Reserve deposits 200 Total assets 31\" Total Ilabllltles $1" | and the commercial banks' balance sheet is ___. Consolidated Balance Sheet of Banks ____._.__- Assets Llahllltles Vault cash 3 100 Deposits $3000 Reserve deposits 200 Loans 2700 Total assets sun Total liabilities $3000 ____________

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