Consider the Cumulated Balance Sheets for the Federal Reserve System and the Com

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Consider the Cumulated Balance Sheets for the Federal Reserve System and the Commercial Banking System. All figures are in billions of US dollars. Show the effect of the following transactions on balance sheets of the FED and the Commercial Banking System. Show how each transaction causes the money supply (M1) to change. Do not cumulate your answers. Because the FED lowered id i_4, Commercial Banks borrow $4 Billion from the Fed. The FED sells $7 billion in securities to the Public, who pay with personal & business checks. Customers of Commercial Banks pay off $10 billion in personal and commercial loans The FED buys $12 billion in securities from Commercial Banks. Commercial banks order $2 billion in new currency from the FED.

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Consider the Cumulated Balance Sheets for the Federal Reserve System and the Com

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