2. Required and excess reserves Suppose that Best National Bank currently has $100,000 in checkable deposits...

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Question

business economics

Answer 1

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Answer #1

Total deposits = $100,000 and outstanding loans = $65,000

Reserves = total deposits - outstanding loans = $100,000 - $65,000 = $35,000.

Reserve requirement is 10%.
Required reserve = 10% of deposits = 10% of $100,000 = $10,000

Excess reserves = Reserves - Required reserve = $35,000 - $10,000 = $25,000

Answer 2

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