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 lower bank reserves by $200 million by transacting with BHZ Bank. THE FEDERAL RESERVE (All values in millions of dollars) Assets Liabilities and Shareholders' Equity Treasury Bonds 1,200 Reserves 1,400 Other bonds 800 Currency 600 Total Assets 2,000 Total Liabilities 2,000 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 1,000 Reserves 1,200 Treasury Bonds Other bonds 800 Currency 600 Total Assets 1,800 Total Liabilities 1,800 Now suppose the following balance sheet shows BHZ Bank's position prior to its transaction with the Fed. 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) Liabilities and Shareholders' Equity Assets Reserves 300 800 Deposits and other liabilities Shareholders' equity Bonds and other investments 700 200 Total Assets 1,000 Liabilities + Shareholders' equity 1,000 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) Liabilities and Shareholders' Equity Assets Reserves Deposits and other liabilities Shareholders' equity Bonds and other investments Total Assets Liabilities + Shareholders' equity