1.When would the FOMC conduct contractionary activities?Explain the transactions the Fed Bank of NY would undertake to carry out contractionary activities.

2.National Bank currently has $20 billion in transaction deposits on its balance sheet.The current reserve requirement is 10%.The Federal Reserve is lowering reserve requirements to 7%.Show the balance sheet of National Bank and the Federal Reserve if National Bank converts 90% of its excess reserves to loans and borrowers return 80% of these funds to National Bank as transaction deposits