A bank has $140,000 in reserves, $1,600,000 in loans, and checkable deposits of $1,250,000. If the...
- A bank has $140,000 in reserves, $1,600,000 in loans, and checkable deposits of $1,250,000. If the required reserve ratio is 10%, how are reserves split between required reserves and excess reserves?
Homework Answers
Required Reserve Ratio = 10%
Checkable deposit = $1250000
Required Reserve = Required Reserve Ratio * Checkable Deposit
Required Reserve = (10%) ($1250000)
Required Reserve = $125000
Actual Reserve = $140000 (Given)
Excess reserve = Actual Reserve - Required Reserve
Excess Reserve = $140000 - $125000
Excess Reserve = $15000.
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