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Using T-accounts please explain what happens to bank reserves and monetary base when a bank sells $10 million of bonds to the Fed to pay
Using T-accounts please explain what happens to bank reserves and monetary base when a bank sells $10 million of bonds to the Fed to pay back $10 million on the loan it owes to the Fed? You will need to show the changes on two T-accounts, one for the Fed and another for the bank.
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