Suppose the Federal Reserve Bank decides to make an open market purchase. The Feds buy order is matched with a sell order placed not by a bank but instead an individual or a non-bank corporation. The Fed buys $150 in US T-bills from the non-bank public. The seller of the T-bills receives a $ 150 check from the Fed, which he or she cashes at Bank of America.

1. Using T-accounts show the impact of this transaction of the balance sheets of all three market participations
2. Non-bank public

Assets	Liabilities

Bank of America

Assets	Liabilities

The Fed

Assets	Liabilities

2. Using the AS-AD diagram, show what impact Feds decision will have on aggragate output and price level, (clearly label)