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Bank Three currently has $500 million in transaction deposits on its balance sheet. The Federal Reserve has currently set the reserve requirement at 8 percent

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Bank Three currently has $500 million in transaction deposits on its balance sheet. The Federal Reserve has currently set the reserve requirement at 8 percent of transaction deposits. Complete the bank's initial balance sheet under the current reserve requirement. Following the previous question, if the Federal Reserve decreases the reserve requirement to 5 percent, show the balance sheet of Bank Three 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. Also assume that Bank Three is the only commercial bank in the economy

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