T-accounts
1. Use T-accounts to show the effect of the following on the balance sheets of the Fed and the banking system:
a. The Fed increases discount loans by $2 billion.
b. The Fed carries out a $2 billion open market sale.
2. Suppose that the Fed decides to spend $10 million to renovate the Federal Reserve Bank of Richmond. What effect will this spending have on the monetary base? Briefly explain.
T-accountsT-accounts