Suppose the Fed conducts an open market purchase by buying $10 million in Treasury bonds from Acme Bank. Sketch out the balance sheet changes that will occur as Acme converts the bond sale proceeds to...

Suppose the Fed conducts an open market
purchase by buying $10 million in Treasury
bonds from Acme Bank. Sketch out the
balance sheet changes that will occur as
Acme converts the bond sale proceeds to
new loans. The initial Acme bank balance
sheet contains the following information:
Assets – reserves 30, bonds 50, and loans 50;
Liabilities – deposits 100 and equity 30.