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(Table: Mexico's Central Bank Balance Sheet) Suppose the central bank engages in an open-market purchase of 300 million pesos. What will happen to reserves, domestic

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(Table: Mexico's Central Bank Balance Sheet) Suppose the central bank engages in an open-market purchase of 300 million pesos. What will happen to reserves, domestic credit, and the backing ratio? Explain how these changes take place. Simplified Central Bank Balance Sheet (millions of pesos) Assets Reserves R Foreign assets (dollar reserves) Domestic credit B Domestic assets (peso bonds) Liabilities |Money supply M |Currency in circulation 750 2,250 |1,500

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