BSW Bank currently has $300 million in transaction deposits on its balance sheet. The Federal Reserve has currently set the reserve requirement at 6 percent of transaction deposits. a. If the Federal Reserve decreases the reserve requirement to 4 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 outloans and that borrowers eventually return all of these funds to BSW in the form of transaction deposits. b. Redo part (a) using a 8 percent reserve requirement Complete this question by entering your answers in the tabs below. Required A Required B If the Federal Reserve decreases the reserve requirement to 4 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. (Do not round intermediate calculations. Enter your answers in millions rounded to the nearest dollar amount.) Show less Panel A initial Balance Sheets Federal Reserve Bank Assets Liabilities Securities 18 million Reserve accounts million 18 BSW Bank Assets Liabilities 300 Loans Reserve deposts at Fed million 282 18 Transaction deposits million million Panel B: Balance Sheet after All Changes Federal Reserve Bank Ansets Liabilities Securities million Reserve accounts 18 million BSW Bank Assets Liabilities Transaction deposits 450 million Loans Reserve deposits at Fed 432 million 18 million BSW Bank currently has $300 million in transaction deposits on its balance sheet. The Federal Reserve has currently set the reserve requirement at 6 percent of transaction deposits a. If the Federal Reserve decreases the reserve requirement to 4 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. b. Redo part (a) using a 8 percent reserve requirement. Complete this question by entering your answers in the tabs below. Required A Required B Redo part (a) using a 8 percent reserve requirement. (Do not round intermediate calculations. Enter your answers in millions rounded to the nearest dollar amount.) Panel A Intial Balance Sheets Federal Reserve Bank Assets Liabilities Securities 18 million Reserve accounts 18 milion BSW Bank Assets Liabilities 282 300 Loans Reserve deposits at Fed Transaction deposits milion milion milion 18 Panel B: Balance Sheet after Al Changes Federal Reserve Bank Assets Liabilities Securities 18 million Reserve accounts 18 milion BSW Bank Assets Liabilities Loans Transaction deposits S 225 milion 207 18 million milion Reserve deposits at fed
