Suppose the balance sheet for Bank ABC is as given below, where numbers are in thousands of dollars. Assume that reserves are 10 percent of deposits and that people hold no currency. 
(A)Suppose the Federal Reserve sells $20,000 worth of government bonds to Joe, a private citizen, and Joe writes a check to the Fed from his checking account at Bank ABC. Show how Joe's purchase changes the balance sheet above.
(B)Is Bank ABC meeting its reserve requirements? Explain.
(C)If bonds are fixed, what has to happen to loans? Explain.
(D)What happens to the money supply in the economy as a result of Joe's purchase?
Definitions:
Bureau of Justice Statistics
A U.S. government agency responsible for collecting, analyzing, and publishing data on crime, criminal offenders, victims of crime, and the operation of justice systems at all levels of government.
Officer Involved Shootings
Incidents where law enforcement officers use their firearms to shoot or fatally wound a person.
Bystanders
Individuals who are present at an event or incident but do not take part in it.
Police Arrests
A process by which law enforcement authorities take individuals into custody, typically due to suspicion of their involvement in criminal activity.
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