Question

a. BSW has 400 million in deposits on balance sheets. Fed set reserve requirement rate at 6 percent.

If Fed decreases to 4 percent show balance sheet of BSW and Feds. show full effect. Expect all loans given out

b. Redo a. at using 8 percent requirement

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.)

Answer 1

Answer: Past A Federal Reserve Bank. Asserti Liabilities Securities 18 millions Reserve accounts 18 millions I BSW Bank. Assets Liabilities. Transaction 400 milliony deposits Loans 282 millions 18 millions Reserve deposits I at fed 1 Federal Reserve Bank. Assets Secusities Cabilities. Reserve accounts (18/millions | 18 millions BSW Bank Assets liabilities. millions | Transaction deposits 450 millions Loans 1432 Reserve deposits 18 at fed CamScanner millions Si canned with

Transaction deposits = 18 ]4.4. = $450 millions. part B ir Federal Reserve Bank. Assets Ulabilities. Securities 18 millions Reserve 18 millions accounts BSW Bank : Assets Loans 282 Reserve | 18 deposits at Liabilities. Transaction deposits 400 millions millions - millions federal Reserve Bank. Assets Securities 118 millions Liabilities. Reserve accounts 18 million Bow Bank. Assets Liabilities loans 1207 millions Transaction | 225 million _deposits | Reservedeposits 18 millions L at fed Caransaction deposits = 188' = $ 225 millione