Macroeconomics

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Show the changes to the T-accounts for the Federal Reserve and
for commercial banks when the Federal Reserve buys $50
million in U.S. Treasury bills. If the public holds a fixed amount
of currency (so that all loans create an equal amount of deposits
in the banking system), the minimum reserve ratio is 10%, and
banks hold no excess reserves, by how much will deposits in the
commercial banks change? By how much will the money supply
change? Show the final changes to the T-account for commercial
banks when the money supply changes by this amount.

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