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QUESTION
Federal Reserve Bank Assets Liabilities Bank One Assets Liabilities Ban k Two Assets Liabilities
Answer and explain the following question:
Q: Fill in the table above to show what happens when the Federal Reserve buys $100,000 in securities when the reserve requirement is 25%. Use appropriate labels and explain each step to the right. Assume that there are no excess reserves. Write the formula for the money multiplier and use it to calculate the total effect that the above security purchase will have on the money supply.
Federal Reserve Bank Assets Liabilities Bank OneAssets Liabilities Ban k Two Assets Liabilities