1) Bank 1 has deposits of $4101 and reserves of $694. If the required reserve ratio...
1) Bank 1 has deposits of $4101 and reserves of $694. If the required reserve ratio is 10%, what is the value of the bank's required reserves? Enter a whole number with no dollar sign. Round to the nearest whole number.
2) If the banking system as a whole has reserves equal to $572 and the reserve ratio is 18% then what is the value of deposits, assuming banks hold no excess reserves? Enter a whole number with no dollar sign. Round to the nearest whole number.
Homework Answers
Solution:-
(1). Required Reserves = Reserve Ratio * Deposits
= 10% * 4101
= 0.10 * 4101
= 410.1
SO, Required Reserve is 410.1
(2). Required Reserve = $572 as excess reserve are zero
Required Reserve = Reserve Ration * Deposit
572 = 18% * Deposit
572 = 0.18 * Deposit
Deposit = 572 / 0.18
Deposit = 3177.78
SO, Deposit is 3177.78
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