Chapter 17, Problem 23AP

To determine

The way in which the T-account of the banking system will look in equilibrium if the Fed reduces the reserves by selling $5 million worth of bonds to the bank and to determine to the effect on the level of checkable deposits.

ConceptIntroduction:

Checkable deposit −It refers to the demand deposit accounts against which drafts and checks can be issued. Checkable deposit accounts include savings accounts, checking accounts, money market accounts, negotiable drafts and checking accounts.