Question: Question 2 . ( PLO 1 . 1 3 points ) What happens to reserves at the First National Bank if one person withdraws $

Question 2.(PLO 1.13 points)
What happens to reserves at the First National Bank if one person withdraws $1,100 of cash and another person deposits $200 of cash? Use T-accounts to explain your answer.
The following assumptions are made: The required reserve ratio on checkable deposits is 10%, banks do not hold any excess reserves, and the publics holdings of currency do not change. Using T-accounts, show what happens to checkable deposits in the banking system when the Fed lends $1 million to the First National Bank.

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