2.

a. Show the following in Asset and Liability sides of the T accounts of the Fed,

Bank A, Mr. Smith, and the Treasury. (Each entry should appear twice as an

Asset or a Liability in different T accounts)

Cash 50 mn (held by Mr. Smith), Reserves 70 mn (cash held in Bank A), Demand

Deposits of Mr. Smith 100mn, Savings accounts of Mr. Smith 300 mn, Treasury

Bills owned by Fed, Banks and Mr. Smith, Loans each having 25 mn each.

b. Using the above information estimate the Monetary Base, M1, and M2