What effect will this spending have on the monetary base

Reference no: EM131304100

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.

Reference no: EM131304100

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