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BSW Bank currently has $ 1 5 0 million in transaction deposits on its balance sheet. The Federal Reserve has currently set the reserve requirement
BSW Bank currently has $ million in transaction deposits on
its balance sheet. The Federal Reserve has currently set the
reserve requirement at percent of transaction deposits. LG
a If the Federal Reserve decreases the reserve requirement to
percent, show the balance sheet of BSW and the Federal Reserve
System just before and after the full effect of the reserve
requirement change. Assume BSW withdraws all excess reserves and
gives out loans and that borrowers eventually return all of these
funds to BSW in the form of transaction deposits.bRedo part a using a percent reserve requirement.
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