Cumulated Balance Sheet Sample Problem Consider the Cumulated Balance Sheets for the Federal Reserve System and the Commercial Banking System. All figures are in billions of US dollars. Federal Reserve System Commercial Banking System Assets Liabilities Assets Liabilities Securities Reserves of CBS Reserves = $85 billion Demand Deposits - $135 billion $85 billion - $160 billion Loans to CBS Treasury Deposits Loans S58 billion Loans from the FED $75 billion -$45 billion - $75 billion Currency in Circulation Securities $80 billion -$45 billion Currency - $47 billion Show the effect of the following transactions on balance sheets of the FED and the Commercial Banking System. Show how each transaction causes the money supply (MI) to change. Do not cumulate your answers, TI. Because the FED lowered is, Commercial Banks borrow $8 Billion from the Fed. T2. The FED sells $5 billion in securities to the Public, who pay with personal & business checks. T3. Because the FED raised ig & id, Customers of Commercial Banks pay off $15 billion in personal and commercial loans. T4. The FED buys $10 billion in securities from Commercial Banks. TS. Commercial banks order S9 billion in new currency from the FED. The Federal Reserve Commercial Banking System Assets/AA Liabilities/AL Assets/AA Liabilities/AL AM1 TI T2 T3 T4 1'5