1. What happens to reserves at the First National Bank if one person withdraws $1,000 of cash and another person deposits $500 of cash? Use T-account to explain your answer. Question 2. Explain why you would be more or less willing to buy gold under the following circumstances: 1. Gold becomes acceptable as a medium of exchange 2. Prices in the gold market become more volatile 3. You expec inflation to rise, and gold prices tend to move with the aggregate price level. 4. You expect interest rates to rise