National Bank currently has $1,750 million in transaction deposits on its balance sheet. The current reserve requirement is 8 percent, but the Federal Reserve is decreasing this requirement to 6 percent. a. Show the balance sheet of the Federal Reserve and National Bank if National Bank converts all excess reserves to loans, but borrowers return only 50 percent of these funds to National Bank as transaction deposits. b. Show the balance sheet of the Federal Reserve and National Bank if National Bank converts 90 percent of its excess reserves to loans and borrowers return 70 percent of these funds to National Bank as transaction deposits. Complete this question by entering your answers in the tabs below. Required A Required B Show the balance sheet of the Federal Reserve and National Bank if National Bank converts all excess reserves to loans, but borrowers return only 50 percent of these funds to National 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 Assets Assets Panel B: Balance Sheet after All Changes Federal Reserve Bank million million million National Bank Liabilities Liabilities million million
National Bank currently has $1,750 million in transaction deposits on its balance sheet. The current reserve requirement is 8 percent, but the Federal Reserve is decreasing this requirement to 6 percent. a. Show the balance sheet of the Federal Reserve and National Bank if National Bank converts all excess reserves to loans, but borrowers return only 50 percent of these funds to National Bank as transaction deposits. b. Show the balance sheet of the Federal Reserve and National Bank if National Bank converts 90 percent of its excess reserves to loans and borrowers return 70 percent of these funds to National Bank as transaction deposits. Complete this question by entering your answers in the tabs below. Required A Required B Show the balance sheet of the Federal Reserve and National Bank if National Bank converts all excess reserves to loans, but borrowers return only 50 percent of these funds to National 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 Assets Assets Panel B: Balance Sheet after All Changes Federal Reserve Bank million million million National Bank Liabilities Liabilities million million
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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National Bank currently has $1,750 million in transaction deposits on its balance sheet. The current reserve requirement is 8 percent,
but the Federal Reserve is decreasing this requirement to 6 percent.
a. Show the balance sheet of the Federal Reserve and National Bank if National Bank converts all excess reserves to loans, but
borrowers return only 50 percent of these funds to National Bank as transaction deposits.
b. Show the balance sheet of the Federal Reserve and National Bank if National Bank converts 90 percent of its excess reserves to
loans and borrowers return 70 percent of these funds to National Bank as transaction deposits.
Complete this question by entering your answers in the tabs below.
Required A Required B
Show the balance sheet of the Federal Reserve and National Bank if National Bank converts all excess reserves to loans, but borrowers return
only 50 percent of these funds to National 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
Assets
Assets
Panel B: Balance Sheet after All Changes
Federal Reserve Bank
million
million
million
National Bank
Liabilities
Liabilities
million
million
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