Net effect of these two transactions on monetary base

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A major lottery advertises that it pays the winner $10 million. However, this prize money is paid at the rate of $500,000 each year (with the first payment being immediate) for a total of 20 payments. What is the present value of this prize at 10% interest?

The Fed sold $1.2 billion of mortgage backed securities. At the same time, the U.S. treasury collected $5.6 billion of taxes and depositied them with the fed. What is the net effect of these two transactions on the monetary base?

Reference no: EM131835338

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