8) The following table shows the initial balance sheets of Bank A and The Federal Reserve (Fed). Suppose that the Fed then buys $10 million in bonds from Bank A. Bank A Assets Liabilities Bonds $90 million $100 million $20 million Deposits Shareholders' equity Reserves $30 million Total assets $120 million Total Liabilities $120 million The Fed Assets Liabilities Treasury bonds $400 million Reserves $ 500 million $ 300 million Other bonds $400 million Currency Total assets $800 million Total Liabilities $800 million a. What are total assets and total liabilities for Bank A after the transaction? Write down the new balance sheet for Bank A. b. Excess reserves are reserves that banks hold beyond what they are required to hold to meet their reserve requirement. Assume that the reserve ratio is 10%. What are excess reserves for Bank A before and after the transaction? What are the pros and cons for Bank A of holding excess reserves? c. What are total assets and total liabilities for the Fed after the transaction? Write down the new balance sheet for The Fed d. Why would the The Fed conduct such a transaction? 8) The following table shows the initial balance sheets of Bank A and The Federal Reserve (Fed). Suppose that the Fed then buys $10 million in bonds from Bank A. Bank A Assets Liabilities Bonds $90 million $100 million $20 million Deposits Shareholders' equity Reserves $30 million Total assets $120 million Total Liabilities $120 million The Fed Assets Liabilities Treasury bonds $400 million Reserves $ 500 million $ 300 million Other bonds $400 million Currency Total assets $800 million Total Liabilities $800 million a. What are total assets and total liabilities for Bank A after the transaction? Write down the new balance sheet for Bank A. b. Excess reserves are reserves that banks hold beyond what they are required to hold to meet their reserve requirement. Assume that the reserve ratio is 10%. What are excess reserves for Bank A before and after the transaction? What are the pros and cons for Bank A of holding excess reserves? c. What are total assets and total liabilities for the Fed after the transaction? Write down the new balance sheet for The Fed d. Why would the The Fed conduct such a transaction