Assume all money is held in the form of currency

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Reference no: EM131001900

Assume all money is held in the form of currency. Assume central bank money (H) is initially equal to $100 million. Now suppose the Fed conducts an open market purchase of government bonds equal to $10 million. Explain the effect of this action on:

(a) the Fed’s balance sheet (show changes only)

(b) the price of government bonds

(d) the money demand curve

(e) central bank money (H)

(f) the money supply curve

Reference no: EM131001900

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