Part II. Written Questions 1. Central Bank T-Account A Private Bank T-Account Assets Government $4 Liabilities + Equity Currency Assets Liabilities+ Equity $4 Reserves $6 Checking $20 Securities in Deposits Circulation Discount $8 Reserves $6 Loans Government Securities $20 Borrowing $8 From Fed Bank Capital $2 Loans $4 Bank Capital $2 a) Suppose the reserve-requirement is 20%, compute the money multiplier. b) Suppose the Central Bank makes a $2 open market purchase with A Private Bank, what will happen to both the Central Bank and A Private Bank's balance sheets. c) Calculate the effect of the $2 purchase on the money supply. d) If the Central Bank made a $2 loan to A Private Bank. How would the Central Bank's loan affect the money supply?