Use commercial bank and Federal Reserve Bank balance sheets to demonstrate theimmediateeffect of each of the following transactions on commercial bank reserves. Assume that the initial reserve ratio is 20 percent. Fill in the new balance in the column in the balance sheet that corresponds with each of the following transactions. Consider each transaction separately,notcumulatively.

a. Federal Reserve Banks purchase $2 billion worth of securities from banks.

b. Commercial banks borrow $1 billion from Federal Reserve Banks at the discount rate.

c. The Fed reduces the reserve ratio from 20 percent to 19 percent.

Instructions:Enter your answers as whole numbers in the gray-shaded cells of both tables below.

Assets: Reserves Securities LOB ns Liabilities and net worth: Checkable deposits Loans from the Federal Reserve Banks Assets: Securities Loans to commercial banks Liabilities and net worth: Reserves of commercial banks Treasury deposits Federal Reserve Notes Other liabilities and net worth d. Commercial banks increase their reserves after the Fed increases the interest rate it pays on reserves. Which of the columns above could represent this action? (Click to select) v