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The Federal Reserve wants to increase the supply of reserves, so it purchases $1 million of bonds from the public. Show the effect of this

  1. The Federal Reserve wants to increase the supply of reserves, so it purchases $1 million of bonds from the public. Show the effect of this open market operation using T-accounts.

The Public

Assets

Liabilities

Banking System

Assets

Liabilities

Federal Reserve System

Assets

Liabilities

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