91Ó°ÊÓ

The balance sheet before the Treasury bond is stated below

$\begin{array}{|llll|}\hline \text{Assets (in \$ million)}& \text{Liabilities (in \$ million)}& & \\ \text{Reserves}& 30& \text{Deposit}& 300\\ \text{Bonds}& 50& \text{Equity}& 30\\ \text{Loans}& 250& & \\ \hline\end{array}$

Fed sells $10 million in Treasury bonds to the bank. So, the money reserve of the bank declines by $10 million, and bond boosts by the identical amount, as stated below:

$\begin{array}{|llll|}\hline \text{Assets (in \$ million)}& \text{Liabilities (in \$ million)}& & \\ \text{Reserves}& 30-10=20& \text{Deposit}& 300\\ \text{Bonds}& 50+10=60& \text{Equity}& 30\\ \text{Loans}& 250& & \\ \hline\end{array}$

Now Acme likes to correct its reserve, which is 10% of deposits, that is $10\%×\$300\text{million}=\$30\text{million}$And Acme bank does this by lowering its loans. To boost reserve to $30 million, the bank declines its loans by $10 million, as stated below:

$\begin{array}{|llll|}\hline \text{Assets (in \$ million)}& \text{Liabilities (in \$ million)}& & \\ \text{Reserves}& 20+10=30& \text{Deposit}& 300\\ \text{Bonds}& 60& \text{Equity}& 30\\ \text{Loans}& 250-10=240& & \\ \text{Total}& 330& \text{Total}& 330\\ \hline\end{array}$