Question

Use the following balance sheets for the RBA, NAB and Westpac to illustrate effects of the following transactions. Use a plus (+) to denote inflows and a minus (-) to denote outflows

Edit:

The answer section below each question is to describe the effects of the transaction towards the amount of ESA after each transactions. The balance sheet in the end is supposed to reflect the total changes in the account of each bank after all three transactions, a (+) i sign is used when there is an inflow into the account after all three transactions and a (-) sign is used when there is an outflow from the account after all three transactions.
2.1 The Federal Government deposits $200 million in pension payments into the accounts of NAB customers. What has happened to the amount of ESA funds ("cash”) in the system? Answer: 2.2 Westpac sells $200 million worth of securities to NAB. What has happened to the amount of ESA funds ("cash”) in the system? Answer: 2.3 The RBA sells $200 million worth of securities to Westpac. What has happened to the amount of ESA funds ("cash”) in the system? Answer:

Answer 1

2.1

IN THE BOOKS OF NAB

2.2

IN THE BOOKS OF WESTPAC

2.3

IN THE BOOKS OF RBA

ESA FUNDS A/C

DR

200

DEPOSITS A/C

DR

200

ESA WESTPAC A/C

DR

200

DEPOSITS A/C

CR

200

SECURITIES A/C

CR

200

SECURITIES A/C

CR

200

IN THE BOOKS OF NAB

IN THE BOOKS OF WESTPAC

SECURITIES A/C

DR

200

SECURITIES A/C

DR

200

DEPOSITS A/C

CR

200

DEPOSITS A/C

CR

200

ASSETS	NAB	WESTPAC	RBA	LIABILITIES	NAB	WESTPAC	RBA
ESA	200	0	0	DEPOSITS	400	0	0
LOANS	0	0	0	ESA NAB	0	0	0
SECURITIES	200	0	-200	ESA WESTPAC	0	0	-200
				GOVT ACCOUNT	0	0	0
	400	0	-200		400	0	-200