2. Banks Balance Sheets (15 minutes): Consider the initial balance sheet of com- mercial Bank A and of the Central Bank: Central Bank Assets Bank A Liabilities Assets Liabilities Gold $5 Reserves $200 Bonds $220 $25 Cash Bonds $40 Equity $20 Reserves $10 Deposits $100 Loans $70 For each of the following three scenarios, illustrate with a new pair of diagrams how the balance sheets of Bank A and that of the Central Bank change: (a) Suppose Bank A's deposits drop by $5. Bank A uses its Reserves to fund the withdrawal and then a standard open market operation to replenish its Reserves to the required level. (b) Suppose Bank A's deposits drop by $20. Bank A uses all of its Reserves to fund the withdrawal and then a standard open market operation to find the liquidity for the remaining of the balance. Finally, it uses another open market operation to replenish its Reserves to the required level. (c) The Central Bank conducts an unconventional open market operation and pur- chases $20 of Bank A's Loans.