MHM Bank currently has $750 million in transaction deposits on its balance sheet. The current reserv 1 answer below »
MHM Bank currently has $750 million in transaction deposits on its balance sheet. The current reserve requirement is 8 percent, but the Federal Reserve is increasing this requirement to 10 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 50 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 (Click to select)Transaction depositsLoansReserve accountsReserve deposits at FedSecurities $ million (Click to select)Transaction depositsReserve deposits at FedSecuritiesLoansReserve accounts $ million MHM Bank Assets Liabilities (Click to select)Reserve deposits at FedSecuritiesReserve accountsLoansTransaction deposits $ million (Click to select)Reserve accountsSecuritiesReserve deposits at FedTransaction depositsLoans $ million (Click to select)Reserve accountsSecuritiesReserve deposits at FedTransaction depositsLoans $ million Panel B: Balance sheet after all changes Federal Reserve Bank Assets Liabilities (Click to select)LoansSecuritiesTransaction depositsReserve accountsReserve deposits at Fed $ million (Click to select)LoansTransaction depositsSecuritiesReserve deposits at FedReserve accounts $ million MHM Bank Assets Liabilities (Click to select)Transaction depositsSecuritiesLoansReserve deposits at FedReserve accounts $ million (Click to select)Transaction depositsSecuritiesReserve deposits at FedReserve accountsLoans $ million (Click to select)LoansSecuritiesReserve accountsReserve deposits at FedTransaction deposits $ million b.
Show the balance sheet of the Federal Reserve and MHM Bank if MHM Bank converts 80 percent of its excess reserves to loans and borrowers return 85 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 (Click to select)Reserve accountsTransaction depositsSecuritiesReserve deposits at FedLoans $ million (Click to select)Reserve accountsTransaction depositsReserve deposits at FedSecuritiesLoans $ million MHM Bank Assets Liabilities (Click to select)Reserve deposits at FedSecuritiesReserve accountsTransaction depositsLoans $ million (Click to select)Transaction depositsSecuritiesReserve accountsReserve deposits at FedLoans $ million (Click to select)Reserve deposits at FedSecuritiesLoansTransaction depositsReserve accounts $ million Panel B: Balance sheet after all changes Federal Reserve Bank Assets Liabilities (Click to select)SecuritiesTransaction depositsReserve accountsLoansReserve deposits at Fed $ million (Click to select)Reserve deposits at FedLoansReserve accountsTransaction depositsSecurities $ million MHM Bank Assets Liabilities (Click to select)LoansTransaction depositsSecuritiesReserve deposits at FedReserve accounts $ million (Click to select)Transaction depositsLoansReserve accountsSecuritiesReserve deposits at Fed $ million (Click to select)SecuritiesReserve deposits at FedTransaction depositsReserve accountsLoans $ million