MHM Bank currently has $250 million in transaction deposits on its balance sheet. The current reserve requirement is 10 percent, but the Federal Reserve is increasing this requirement to 12 percent. a. Show the balance sheet of the Federal Reserve and MHM Bank if MHM Bank converts all excess reserves to loans, but borrowers return only 80 percent of these funds to MHM Bank as transaction deposits. b. Show the balance sheet of the Federal Reserve and MHM Bank if MHM Bank converts 85 percent of its excess reserves to loans and borrowers return 90 percent of these funds to MHM Bank as transaction deposits.

Assessment Tool iFrame Jired B Show the balance sheet of the Federal Reserve and MHM Bank if MHM Bank converts all excess reserves to loans, but borrowers return only 80 percent of these funds to MHM Bank as transaction deposits. (Enter your answers in millions. Do not round intermediate calculations. Round your "Panel B" answers to 3 decimal places. (e.g., 32.161)) Panel A: Initial Balance Sheets Federal Reserve Bank Assets Liabilities Securities 25 million Reserve accounts 25 million MHM Bank Assets Liabilities Reserve deposits at Fed $ 25 million Transaction deposits $ 250 million Loans 225 million Panel B: Balance Sheet after All Changes Federal Reserve Bank Assets Liabilities Securities $ 28.125 x million Reserve accounts $ 28.125 X million MHM Bank Assets Liabilities Reserve deposits at Fed $ 28.125 x million Transaction deposits IS x million 234,375.000 Loans 206.250 x million Required A Required B Show the balance sheet of the Federal Reserve and MHM Bank if MHM Bank converts 85 percent of its excess reserves to loans and borrowers return 90 percent of these funds to MHM Bank as transaction deposits. (Enter your answers in millions. Do not round intermediate calculations. Round your "Panel B" answers to 3 decimal places. (e.g., 32.161)) Panel A: Initial Balance Sheets Federal Reserve Bank Assets Liabilities Securities 25 million Reserve accounts $ 25 million MHM Bank Assets Liabilities Reserve deposits at Fed $ Transaction deposits $ 250 million 25 million 225 million Loans Panel B: Balance Sheet after All Changes Federal Reserve Bank Assets Liabilities Securities $ 27.682 X million Reserve accounts >$ 27.682 x million MHM Bank Assets Liabilities $ 27.682 X million Transaction deposits $ 230.682 x million Reserve deposits at Fed Loans 203.000 x million