Unless otherwise stated, the following assumptions are made: the required reserve ratio on checkable deposits is 10%, banks do not hold any excess reserves and the public's holdings of currency do not change. 1. If BOJ sells $2 million of bonds to Irving the Investor, who pays for the bonds with a briefcase filled with currency, what happens to reserves and the monetary base? Use T accounts to explain your answer 2. If the Fed lends five banks an additional total of $100 million but depositors withdraw $50 million and hold it as currency, what happened to reserves and the monetary base? Use T-accounts to explain your answer? 3. Suppose that BOJ buys $1 million of bonds from Scotia. If Scotia and all other banks use the resulting increase in reserves to purchase securities only and not to make loans, what will happen to checkable deposit? 4. If a bank depositor withdraws $1000 of currency from an account, what happens to reserves and checkable deposits? 5. If BOJ reduces reserves by selling $5 million worth of bonds to the banks, what will the T account of the banking system look like when the banking system is in equilibrium? What will have happened to the level of checkable deposits? 6. Using T-accounts, show what happens to checkable deposits in the banking system when BOJ lends an additional \$1 million to Scotia