Answer:
<em>FED - Balance Sheet</em>
Assets- Securities: $30
Liabilities- Reserve Accounts: $30
<em>Bank Three - Balance Sheet</em>
Assets- Loans: $470
Reserve Deposits at Fed: $30
Liabilities- Transaction deposits: $500
<u>If reserve requirement is 4%</u>
<em>FED - Balance Sheet</em>
Assets- Securities: $20
Liabilities- Reserve Accounts: $20
<em>Bank - Balance Sheet</em>
Assets- Loans: $480
Reserve Deposits at Fed: $20
Liabilities- Transaction deposits: $500
<u>If reserve requirement is 8%</u>
<em>FED - Balance Sheet</em>
Assets- Securities: $40
Liabilities- Reserve Accounts: $40
<em>Bank - Balance Sheet</em>
Assets- Loans: $460
Reserve Deposits at Fed: $40
Liabilities- Transaction deposits: $500
Explanation:
Before:
500 million x 6% = 30 million
available for loan 500 - 30 = 470 million
after, with 4%:
500 millon x 0.04 = 20 million
500 - 20 = 480 available
after, with 8%:
500 millon x 0.08 = 60 million
500 - 40 = 460 available