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Suppose the required reserve rate set by the Fed is 10 percent of all checkable deposits. A bank sells $1 million of U.S. Treasury securities
Suppose the required reserve rate set by the Fed is 10 percent of all checkable deposits. A bank sells $1 million of U.S. Treasury securities it owns to the Fed. Describe what this transaction does to the banks total reserves, its required reserves, and its excess reserves.
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