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Below is the balance sheet for Longhorn Bank, a private bank. As a commercial bank, Longhorn Bank faces a 10% reserve requirement. This scenario applies

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Below is the balance sheet for Longhorn Bank, a private bank. As a commercial bank, Longhorn Bank faces a 10% reserve requirement. This scenario applies to the questions 34 - 38. ASSETS LIABILITIES Reserves Customer deposits $1,000,000 $150,000 Loans to households and biz $850,000 Assume that the Fed injects $100 million into the banking system with an open market purchase. Using the T-account for the Fed given below, show the effect of this policy. Just type amounts into the boxes under Assets and Liabilities. FEDERAL RESERVE ASSETS LIABILITIES

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