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QUESTION 2: 4 POINTS Suppose that depositors wants to convert more currency into checkable deposits...

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Accounting

QUESTION 2: 4 POINTS Suppose that depositors wants to convert more currency into checkable deposits at the First National Bank. This can happen after the Christmas season when the public no longer needs to hold currency to buy gifts and so deposits cash. Use balance sheet of the Fed and the First National Bank to show the changes in each of the items, after there is a $10 million shifting from currency to deposits. Instruction: To complete the balance sheet in this question, show the changes of values for each item. For example, if you think the value of an item decreased by $10, write down -$10. If you think the value of an item increases by $10, write down +$10. If you think the value of an item isnt changed, leave it blank

First National Bank Assets Liabilities+Capital Reserves: Deposits: Securities: Borrowings: Loans: Capital:

Federal Reserve System Assets Liabilities Securities: Currency in circulation: Lending to banks: Reserves:

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