Assume that the First National Bank (FNB) is the only commercial bank in the country, and it
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Assume that the First National Bank (FNB) is the only commercial bank in the country, and it always holds an excess reserve of 3%. Supposed that the required reserve is 5% and the Central Bank purchases $100,000 worth of government bonds. Critically explain what will happen to the money supply in the economy using FNB’s T-account. State all the important assumption
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Financial Markets and Institutions
ISBN: 978-0077861667
6th edition
Authors: Anthony Saunders , Marcia Cornett
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