1 Problem 4-3 (LG 4-3) nts Bank Three currently has $800 million in transaction deposits on its balance sheet. The Federal Reserve has currently set the reserve requirement at 10 percent of transaction deposits. a. If the Federal Reserve decreases the reserve requirement to 8 percent, show the balance sheet of Bank Three and the Federal Reserve System just before and after the full effect of the reserve requirement change. Assume Bank Three withdraws all excess reserves and gives out loans and that borrowers eventually return all of these funds to Bank Three in the form of transaction deposits. b. Redo part (a) using a 16 percent reserve requirement. Answer is complete but not entirely correct. Complete this question by entering your answers in the tabs below. Required A Required B Redo part (a) using a 16 percent reserve requirement. (Do not round intermediate calculations. Enter your answers in millions rounded to the nearest dollar amount.) Panel A: Initial Balance Sheets Securities Federal Reserve Bank Assets Liabilities 128 million Reserve accounts 128 million Return to question