Suppose that commercial banks keep no excess reserves, and that as the money supply changes, people do not change the amount of cash in their pockets. The required reserve ratio is 0.25. The Federal Reserve System wishes to reduce the money supply by $800 million, through the use of open market operations.

1. Trace the money contraction process through the balance sheets of two more commercial banks, carefully showing the change in the country's money supply at each step.