What happens to the nonbank balance sheet

Reference no: EM13688938

4. Use the balance sheets to analyze the effects of open market operations.
(a) Suppose a central bank bought a $10,000 bond from a commercial bank, and to finish this transaction, the central bank put a credit of $10,000 into the commercial bank's account with the central bank in exchange for bonds. What changes happen to the central bank's balance sheet? What changes happen to the commercial bank's balance sheet?
(b) Suppose a central bank bought a $10,000 bond from the public (any nonbank), and that nonbank seller of bonds keeps the proceeds as cash. What happens to the central bank's balance sheet? What happens to the nonbank's balance sheet?

Reference no: EM13688938

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