Question

This exercise utilizes two balance? sheets, one for the Federal Reserve and one for BHZ? Bank, a representative member of the banking system. Given the following balance sheet showing the? Fed's initial? position, suppose the Federal Reserve wants to raise bank reserves by ?$100 million by transacting with BHZ Bank. (fill in the blanks)

THE FEDERAL RESERVE ?(All values in millions of? dollars)

Assets Liabilities and Shareholders' Equity

Treasury Bonds 1,100 Reserves 1,300

Other bonds 600 Currency 400

Total Assets 1,700 Total Liabilities 1,700

After the transaction is? completed, show how the? Fed's balance sheet will look. ?(You must enter six integer? values, one for each balance sheet item.?) THE FEDERAL RESERVE???(All values in millions of? dollars)

Assets Liabilities and Shareholders' Equity

Treasury Bonds ____________ Reserves ___________

Other bonds _____________ Currency ___________

Total Assets _________ Total Liabilities ____________

Now suppose the following balance sheet shows BHZ? Bank's position prior to its transaction with the Fed.

BHZ BANK???(All values in millions of? dollars)

Assets Liabilities and Shareholders' Equity

Reserves 300 Deposits and other liabilities 900

Bonds and other investments 800 Shareholders' equity 200

Total Assets 1,100 Liabilities + Shareholders' equity 1,100

After its transaction with the Fed is? completed, show how BHZ? Bank's balance sheet will look. ?(You must enter six integer? values, one for each balance sheet item.?)

BHZ BANK???(All values in millions of? dollars)

Assets ___________ Liabilities and Shareholders' Equity __________

Reserves_________ Deposits and other liabilities____________

Bonds and other investments___________ Shareholders' equity__________

Total Assets________________ Liabilities + Shareholders' equity_____________

Answer 1