The Economics of Money, Banking and Financial Markets 4th Edition by Frederic Mishkin

تمرين 16

Unless otherwise noted, the following assumptions are made in all questions: The required reserve ratio on checkable deposits iS₁0%, banks do not hold any excess reserves, and the public's holdings of currency do not change.
If the Fed reduces reserves by selling $5 million worth of bonds to the banks, what will the T-account of the banking system look like when the banking system is in equilibrium? What will have happened to the level of checkable deposits?