Suppose the current require reserve ration is 10% and all commercial banks hold 5% excess reserves.

a. Suppose the Fed had an open market sale of US government securities for $100,000 to Megabank

1. How does this affect the balance sheets of Magabanks and the Fed?( write out tow t-accounts to show the changes, on for Megabank and one for the fed)
2. How much change in monetary base is caused by the open market operations? Also calculate how much change in the money supply is caused by this open market operation.