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"Construct" T-accounts for the following transactions. Be sure to explain what happens to the assets and...

"Construct" T-accounts for the following transactions. Be sure to explain what happens to the assets and liabilities for First National Bank and the Federal Reserve for the following scenarios. Be sure to identify what happens to reserves and the monetary base for each.

a) The Federal Reserve purchases $2 million of bonds from First National Bank.

b) The Federal Reserve finances a loan of $10 million for First National Bank. At the same time, depositors withdraw $5 million and hold it as currency.

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