Homework #5

Chapter 16 The Monetary System

Use T-accounts to show the effects of the following transactions on the First National Bank (FNB).

1. A customer withdraws $100 from his/her FNB checking account.
2. A customer deposits a check of $100 drawn on Second National Bank to his/her FNB checking account.
3. You repay a $100 loan from FNB by giving a $100 bill to FNB.
4. You repay a $100 loan from FNB by writing a $100 check from your FNB checking account.
5. You repay a $100 loan from FNB by writing a $100 check from your Second National Bank checking account.
6. FNB borrows $100 from the Fed.
7. The Fed purchases $100 of government bonds from FNB.
8. The Fed sells $100 of government bonds to FNB.