national bank currently has 500 million in transactional deposits on its balance sheets. The current reserve requirement
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Question:
national bank currently has 500 million in transactional deposits on its balance sheets. The current reserve requirement is 10%, but the federal reserve is decreasing this requirement to 8%.
a. show the balance sheet of the federal reserve and National Bank if the National Bank converts all excess reserves to loans, but borrowers return only 50% of these funds to National Bank as transactional deposits.
b. Show the balance sheet of the Federal Reserve and the National Bank if the National Bank converts 75% of its excess reserves to loans and borrowers return 60% of these funds to National Bank as transactional deposits.
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