Answer Happy

Money, Banking, and the Federal Reserve System - End of Chapter Problem a. Show the changes to the T-accounts for the Federal Reserve when the Federal Reserve sells $30 million in U.S. Treasury bills. Assets Liabilities Answer Bank Monetary base -30 million Treasury bills +30 million Treasury bills -30 million Monetary base +30 million
b. Show the changes to the T-accounts for commercial banks when the Federal Reserve sells $30 million in U.S. Treasury bills. Assets Liabilities Answer Bank Reserves -30 million Treasury bills -30 million Reserves +30 million Treasury bills +30 million
c. If the public holds a fixed amount of currency (so that all new loans create an equal amount of checkable bank deposits in the banking system) and the minimum reserve ratio is 5%, by how much will the money supply change in response to this open market operation? Enter your answer in terms of millions of dollars. Total change in money supply: $ million