Macroeconomics 10th Edition by William McEachern

Exercise 2

MONEY CREATION Show how each of the following initially affects bank assets, liabilities, and reserves. Do not include the results of bank behavior resulting from the Fed's action. Assume a required reserve ratio of 0.05.
a. The Fed purchases $10 million worth of U.S. government bonds from a securities trader who puts those funds in a checking account.
b. The Fed loans $5 million to a bank.
c. The Fed raises the required reserve ratio to 0.10.