The government sells $1 million of bonds to the commercial banks. It then uses the funds raised to give subsidies to sugar producers, who deposit these into their bank accounts. Assuming that notes and coins in circulation remain unchanged, what will be the immediate effect on the assets and liabilities of the commercial banks?
- Aassets: bonds +$1 million; reserves –$1 million; liabilities unchanged
- Bassets: bonds +$1 million; liabilities: deposits +$1 million
- Cassets: reserves –$1 million; liabilities: deposits –$1 million
- Dassets unchanged; liabilities unchanged