In the following, assume that the required reserve ratio is 5%.

With T-Accounts (like the ones below), show the immediate effect of a $1000 Open Market Purchase by the Fed from a member of the public who deposits the Fed’s payment into a checking account at the AAA Bank.

AAA Bank

Assets Liabilities

Fed

Assets Liabilities

 

Transcribed Image Text:

AAA Bank Assets Liabilities Assets Fed Liabilities AAA Bank Assets Liabilities Assets Fed Liabilities

Answer rating: 100% (QA)

sol Please note that since the question is asking for immediate changewe are assuming that banks do ... View the full answer