“Construct” T-accounts for the following transactions. Be su…

“Construct” T-accounts for the following transactions. Be sure to explain what happens to the assets and liabilities for First National Bank and the Federal Reserve for the following scenarios.  Be sure to identify what happens to reserves and the monetary base for each. a)  The Federal Reserve purchases $2 million of bonds from First National Bank. b)   The Federal Reserve finances a loan of $10 million for First National Bank. At the same time, depositors withdraw $5 million and hold it as currency.

Answer the questions on the money multiplier based on the fo…

Answer the questions on the money multiplier based on the following information: Suppose that the required reserve ratio is 10%, currency in circulation is $600 billion, the amount of checkable deposits is $950 billion, and excess reserves is $20 billion. a) The money supply is ____________ billion. b) The currency deposit ratio is _____________. c) The excess reserves ratio is ____________. d) The money multiplier is ____________.   e)   Suppose the central bank conducts a large open market purchase of bonds held by banks in the amount of $1,400 billion. Assuming the previous ratios calculated are the same, the money supply should _______________ to $_________________ billion.   f)   Briefly explain what would happen to the money supply if the banks chose to hold these proceeds in excess reserves rather than loan them out.